McDonald’s (NYSE:MCD) Stock Rating Raised to Strong Sell at Melius Research

Melius Research upgraded shares of McDonald’s (NYSE:MCD) to a strong sell rating in a research report report published on Monday morning,Zacks reports.

A number of other equities analysts have also commented on the company. KeyCorp reissued an “overweight” rating on shares of McDonald’s in a research note on Monday, September 21st. Freedom Capital upgraded shares of McDonald’s from a “hold” rating to a “strong-buy” rating in a research report on Wednesday, August 5th. Robert W. Baird decreased their price objective on shares of McDonald’s from $285.00 to $250.00 and set a “neutral” rating on the stock in a report on Thursday, September 24th. Evercore dropped their target price on shares of McDonald’s from $320.00 to $300.00 and set an “outperform” rating for the company in a research note on Thursday. Finally, Wells Fargo & Company reduced their target price on shares of McDonald’s from $320.00 to $300.00 and set an “overweight” rating on the stock in a research report on Thursday, July 16th. One research analyst has rated the stock with a Strong Buy rating, seventeen have issued a Buy rating, eleven have assigned a Hold rating and one has issued a Sell rating to the stock. According to data from MarketBeat, the stock currently has an average rating of “Moderate Buy” and an average target price of $297.27.

McDonald’s Price Performance

Shares of McDonald’s stock opened at $233.32 on Monday. The firm has a market cap of $165.11 billion, a price-to-earnings ratio of 18.95, a P/E/G ratio of 2.56 and a beta of 0.41. The stock has a 50-day simple moving average of $261.55 and a 200-day simple moving average of $279.74. McDonald’s has a 52-week low of $233.23 and a 52-week high of $341.75.

McDonald’s (NYSE:MCD) last released its quarterly earnings data on Tuesday, August 4th. The fast-food giant reported $3.38 EPS for the quarter, topping analysts’ consensus estimates of $3.32 by $0.06. McDonald’s had a negative return on equity of 572.06% and a net margin of 31.72%.The firm had revenue of $7.10 billion for the quarter, compared to the consensus estimate of $7.13 billion. During the same quarter in the prior year, the company posted $3.19 earnings per share. The firm’s revenue was up 3.7% on a year-over-year basis. As a group, equities research analysts predict that McDonald’s will post 12.86 earnings per share for the current year.

McDonald’s Increases Dividend

The company also recently declared a quarterly dividend, which will be paid on Tuesday, December 15th. Investors of record on Tuesday, December 1st will be given a $1.93 dividend. The ex-dividend date is Tuesday, December 1st. This represents a $7.72 dividend on an annualized basis and a dividend yield of 3.3%. This is a positive change from McDonald’s’s previous quarterly dividend of $1.86. McDonald’s’s dividend payout ratio is 60.44%.

Hedge Funds Weigh In On McDonald’s

A number of hedge funds and other institutional investors have recently made changes to their positions in the company. Envestnet Portfolio Solutions Inc. lifted its holdings in McDonald’s by 41.3% during the 2nd quarter. Envestnet Portfolio Solutions Inc. now owns 23,867 shares of the fast-food giant’s stock valued at $6,451,000 after purchasing an additional 6,980 shares during the last quarter. State Street Corp boosted its position in shares of McDonald’s by 1.8% during the 2nd quarter. State Street Corp now owns 36,080,505 shares of the fast-food giant’s stock worth $9,752,921,000 after acquiring an additional 646,675 shares in the last quarter. Security National Bank of Sioux City Iowa IA bought a new position in McDonald’s in the second quarter valued at approximately $71,000. Anchor Investment Management LLC raised its position in McDonald’s by 3.6% during the second quarter. Anchor Investment Management LLC now owns 15,607 shares of the fast-food giant’s stock valued at $4,219,000 after purchasing an additional 537 shares in the last quarter. Finally, Bullseye Investment Management LLC acquired a new position in McDonald’s during the second quarter valued at approximately $133,000. 70.29% of the stock is owned by institutional investors.

Key McDonald’s News

Here are the key news stories impacting McDonald’s this week:

• Positive Sentiment: McDonald’s NEXT strategy targets roughly 250 basis points of restaurant-level efficiency gains through equipment, process improvements and AI-powered operating systems. The company also expects AI tools to reduce labor requirements, potentially improving franchisee economics over time. Restaurant Dive article
• Positive Sentiment: A pilot drive-thru media network at 450 company-owned U.S. restaurants could develop into a sizable advertising business, with a long-term revenue opportunity reportedly approaching $1 billion. Quartz article
• Positive Sentiment: McDonald’s scale, franchised business model, lower valuation and recently raised dividend remain arguments in favor of the stock for long-term, income-focused investors. Zacks article
• Neutral Sentiment: McDonald’s is testing AI-guided menu pricing in the U.S. and select international markets. The initiative could improve profitability, but its effect on customer traffic is uncertain and may attract regulatory scrutiny. Reuters article
• Negative Sentiment: Melius Research moved its rating to “strong sell”, adding to bearish sentiment around valuation, slowing growth and the costs of McDonald’s investment plans. American Banking News article
• Negative Sentiment: Morgan Stanley expects U.S. comparable sales to remain pressured through year-end because of difficult comparisons, while also lowering estimates through 2030 to reflect NEXT-related spending. Yahoo Finance article

McDonald’s Company Profile

McDonald’s Corporation is a global quick-service restaurant company that operates and franchises restaurants under the McDonald’s brand. Its restaurants serve a menu that includes hamburgers, cheeseburgers, chicken sandwiches, French fries, breakfast items, desserts, salads, beverages and coffee. Offerings vary by market, and many locations provide drive-thru service, delivery and digital ordering through the McDonald’s mobile app.

The company operates through a heavily franchised business model, with restaurants owned and operated by independent franchisees, affiliates and the company itself.