Key Stats
- Current Price: ~$284 (May 7, 2026)
- Q1 2026 Revenue: $6.52B, up 9.4% YoY
- Q1 2026 Adjusted EPS: $2.83, up 6% YoY
- Global Comparable Sales Growth: 3.8%
- U.S. Comparable Sales Growth: 3.9%
- Adjusted Operating Margin: 46%
- TIKR Model Price Target: ~$429
- Implied Upside: ~51%
McDonald’s Stock Q1 2026 Earnings Breakdown
McDonald’s stock (MCD) posted Q1 2026 revenue of $6.52B, a 9.4% increase from $5.96B in the prior-year quarter, as global comparable sales grew 3.8% across all three operating segments.
Adjusted EPS came in at $2.83, up from $2.67 in Q1 2025, with a $0.13 per-share tailwind from foreign currency translation; on a constant currency basis, according to CFO Ian Borden on the Q1 2026 earnings call, EPS grew 1% year over year.
The U.S. segment delivered comparable sales growth of 3.9%, supported by the Extra Value Meals relaunch, the McValue platform, and limited-time offers across chicken and beef that helped maintain and grow market share in both categories.
McDonald’s generated more than $3.6B in restaurant margins during the quarter, according to Ian Borden on the Q1 2026 earnings call.
International Operated Markets also posted 3.9% comparable sales growth, led by the U.K., Germany, and Australia, each delivering mid-to-high single-digit growth and gaining share; France was called out as an underperformer, with a new value platform launched in late April to address the gap.
The International Developmental Licensed segment grew comparable sales 3.4%, with continued strength in Japan and stable share performance in China despite persistent macroeconomic pressure.
U.S. company-operated restaurant margins were flagged as unacceptable, according to Ian Borden on the Q1 2026 earnings call, with the company actively reviewing the optimal balance between franchised and company-owned locations.
McDonald’s reaffirmed its full-year 2026 financial targets as outlined in February, with foreign currency expected to provide a full-year EPS tailwind of $0.20 to $0.30 based on current exchange rates, according to Ian Borden on the Q1 2026 earnings call.
McDonald’s Stock Financials: Operating Leverage at a Seasonally Softer Quarter
McDonald’s stock is delivering a consistent operating margin story, with Q1 2026 showing solid profitability within the seasonal rhythm of a lighter revenue quarter.
Total revenue of $6.52B in Q1 2026 compares to $7.01B in Q4 2025, reflecting normal sequential seasonality; the 9.4% year-over-year growth is the strongest in the eight-quarter window shown in the income statement screenshot.
Gross margin came in at 55.9% in Q1 2026, down from a recent peak of 58.0% in Q3 2025 and below the 57.9% to 58% range McDonald’s held through mid-2025.
Gross profit of $3.64B grew 9.2% year over year, consistent with the revenue growth rate, reflecting stable cost-of-goods-sold management despite the beef inflation headwinds management flagged on the call.
Operating income reached $2.95B in Q1 2026, up 11.2% year over year from $2.66B in Q1 2025, marking the strongest year-over-year operating income growth in the eight-quarter sequence.
Operating margin expanded to 45.3% in Q1 2026, up from 44.6% in Q1 2025, recovering meaningfully from the trough without yet returning to the 47.2% to 47.4% range McDonald’s posted through Q2 and Q3 2025.
What Does the Valuation Model Say?
TIKR’s model prices McDonald’s stock at $429, implying roughly 51% upside from the current price of approximately $284 over the next 4.6 years, with an annualized return of 9.3%.
The mid-case scenario assumes a revenue CAGR of 4.8% and a net income margin of 34.2%, modestly above McDonald’s most recent 1-year historical net income margin of 32.6%.
Q1’s 9.4% year-over-year revenue growth and operating margin expansion to 45.3% from 44.6% support the model’s assumptions, particularly the margin recovery thesis embedded in the mid-case net income margin projection.
The reaffirmed full-year guidance, combined with the 3-for-3 execution across value, marketing, and menu, keeps the investment case intact: McDonald’s stock is not repricing fundamental risk; it is trading at a discount to the model’s base estimate of fair value.
McDonald’s posted strong top-line growth and an operating income beat, but company-operated restaurant margins in the U.S. remain the unresolved pressure point that will determine how the investment thesis compounds from here.
Bull Case
- Global comparable sales grew 3.8% across all three segments, with the U.S. and IOM each at 3.9%, confirming the value and marketing playbook is generating consistent traffic gains
- Operating income of $2.95B grew 11.2% year over year, the strongest year-over-year growth in eight quarters, suggesting the margin recovery trajectory is building even in a seasonally lighter quarter
- The new U.S. beverage platform launched in all restaurants in May, with Germany and Canada also launching simultaneously, creating a new incremental revenue layer management described as a tailwind for the balance of 2026
- McDonald’s reaffirmed full-year 2026 guidance and expects a $0.20 to $0.30 foreign currency EPS tailwind, providing a known positive that supports earnings estimates through year-end
Bear Case
- U.S. company-operated restaurant margins were explicitly called unacceptable by CFO Ian Borden, despite 3.9% comparable sales growth, indicating the value program’s cost structure is compressing margins faster than top-line recovery can offset
- April comp sales were slightly negative in both the U.S. and IOM segments due to the lap of the Minecraft promotion, and Q2 is expected to show a meaningful deceleration from Q1’s 3.9% in both segments
- Beef inflation is running at elevated levels, described as particularly pronounced in Europe, and management flagged increased risk of higher cost inflation into late 2026 and 2027 due to ongoing supply chain disruption from the war in the Middle East
- Low-income consumer traffic continues to decline, and management acknowledged that rising gas prices will disproportionately impact that cohort, creating a structural drag on the very customer segment the McValue platform is designed to retain
Should You Invest in McDonald’s Corporation?
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