Key Takeaways
- McDonald’s (MCD) stock gained approximately 7% from October 30 to November 6, closing at $276.52 after its third-quarter earnings beat outweighed weaker U.S. restaurant traffic.
- Restaurant Brands International (QSR) reported 8.4% U.S. comparable sales growth at Burger King, while Chipotle Mexican Grill (CMG) posted 2.1% comparable sales growth, highlighting competitive pressure on McDonald’s.
- McDonald’s adjusted earnings reached $3.57 per share, beating the $3.38 consensus, although revenue of $7.16 billion missed expectations and U.S. comparable sales declined 0.2%.
- McDonald’s looks fairly valued at approximately 20 times forward earnings, with improving customer traffic and its planned 2027 value-menu rollout offering potential catalysts.
What Happened?
McDonald’s (MCD) stock climbed approximately 7% from October 30 to November 6, rising from $258.12 to $276.52, according to historical stock-price data. Most of the attention came after its third-quarter earnings report, which showed stronger profits despite continued weakness in U.S. restaurant traffic.
Shares jumped 6.5% on November 4 after McDonald’s reported adjusted earnings of $3.57 per share, up 11% year over year and ahead of the $3.38 consensus. But revenue of $7.16 billion missed the $7.28 billion analysts expected.
According to the company’s third-quarter earnings results, U.S. comparable sales fell 0.2% as fewer customer visits offset higher average spending. Global comparable sales increased 1.5%, supported by stronger international performance.
The earnings beat came largely from higher franchised restaurant margins and gains from selling restaurants to franchisees rather than a meaningful recovery in U.S. demand. That’s an important distinction: McDonald’s franchise-based business model continues supporting profitability, but getting more customers through restaurant doors remains a challenge.
Competition makes that challenge harder. Restaurant Brands International reported 8.4% comparable sales growth at Burger King in the U.S., while Chipotle Mexican Grill posted 2.1% comparable sales growth, including a 0.8% increase in transactions.
Those results suggest McDonald’s faces competitive challenges beyond broader restaurant-industry pressures, although differences in pricing, customer demographics, and restaurant formats make direct comparisons imperfect.
Still, management sees reasons for optimism. Chairman and CEO Chris Kempczinski said the company was encouraged by improving U.S. performance as the quarter progressed, adding, “We’re focused on building from here, strengthening the business today and investing in the next chapter of growth.”
McDonald’s is testing two entry-level value-menu structures across approximately 1,900 U.S. restaurants, with plans for a nationwide rollout in early 2027.
The opportunity is clear: affordable meals could attract more customers and help restore traffic. The question is whether those additional visits will generate enough sales to offset promotional costs and protect restaurant profitability.
Wall Street estimates in the TIKR chart project normalized EPS of $12.88 in 2026, with earnings expected to increase through 2029.
That outlook suggests analysts expect McDonald’s to continue growing profits despite weaker U.S. customer traffic. However, sustaining that growth will depend on franchise profitability, restaurant productivity, and whether its renewed focus on value can bring customers back.
Is McDonald’s Stock Undervalued or Overvalued?
McDonald’s looks fairly valued rather than deeply undervalued following its recent rally. At approximately 20 times forward earnings, the stock trades below its five-year average of roughly 24 times, but that discount alone doesn’t make it a bargain.
Wall Street expects normalized EPS to reach $12.88 in 2026 and continue rising through 2029, providing a foundation for earnings growth if customer traffic improves and franchise margins remain strong.
The valuation discount offers some upside potential, but investors are also paying for a business facing competitive pressure and a still-unproven U.S. traffic recovery. Higher promotional costs or disappointing customer visits could limit how much the market is willing to pay for future earnings.
McDonald’s is also making a substantial long-term investment in its restaurants. Under its NEXT strategy, the company plans approximately $8.5 billion in franchisee support through 2036, including rent relief and capital investments aimed at improving restaurant efficiency and customer experience.
Those investments could strengthen long-term profitability, although the benefits will take time to materialize.
Overall, McDonald’s appears fairly valued following its recent rally. Improving U.S. customer traffic, maintaining franchise profitability, and successfully launching its 2027 value-menu strategy could support further upside over the next 12 months. Continued traffic weakness and promotional costs remain the biggest risks.
So what is McDonald’s stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
