In the grand symphony of investments, McDonald’s continues to play a golden tune.
McDonald’s (MCD -1.60%), with its unmistakable golden arches, is often trusted by investors for the long haul. Yet, despite its reputation, the stock has been stagnant over the last year, surprisingly flat while the S&P 500 has climbed nearly 24%.
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It’s a Temporary Slump, Folks!
McDonald’s global comparable store sales weren’t exactly hitting high notes for a couple of quarters. Stateside, growth hit a standstill. Abroad, in both its ‘International Operated’ and ‘International Developmental Licensed’ markets, things took a nosedive.
**Comps Growth by Segment**
| Segment | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---|---|---|---|---|---|
| U.S. | 8.1% | 4.3% | 2.5% | (0.7%) | 0.3% |
| International Operated Markets | 8.3% | 4.4% | 2.7% | (1.1%) | (2.1%) |
| International Developmental Licensed Markets | 10.5% | 0.7% | (0.2%) | (1.3%) | (3.5%) |
| Global | 8.8% | 3.4% | 1.9% | (1%) | (1.5%) |
Sure, there was an E. Coli outbreak; a PR nightmare as it were, not to mention a few hurricanes and some inflation winds blowing through consumer wallets. In Europe and beyond, slower spending habits and unsettling conflicts didn’t help either.
Yet for those eyeing the long game, these speed bumps shouldn’t be a roadblock. Analysts are chatting about a 4% compound annual growth rate (CAGR) in revenue from 2023 to 2026.
Mickey D’s Has a Game Plan
McDonald’s isn’t twiddling its thumbs. Amid these hiccups, it’s rolling out success stories like the Chicken Big Mac, spreading it to more regions. They’re also sweetening the deal with a $5 meal offering and a remix of the McValue menu to woo budget-conscious customers.
In the U.S., CFO Ian Frederick Borden has been adamant about rebuilding consumer trust, especially after the onion-triggered E. Coli debacle. The home front generated a stonking 41% of McDonald’s revenue in the first three quarters of 2024 alone.
Across the pond, McDonald’s is jazzing up its McSmart menu, a hit in France and Germany, to combat the inflationary bite. This international operated segment raked in a solid 48% of their revenue earlier in the year.
However, in places like Latin America, China, and the Middle East, geopolitical dances create uncertainty. But that chunk only made up 11% of the pie in 2024. It’s a waiting game before stability returns.
Betting On Technology and Loyalty
In a digital age, Mickey D’s isn’t getting left behind. Their loyalty program has already corralled 150 million active members by 2023 and aims to blow it up to 250 million by 2027. With personalized offers and a flirtation with automation, McDonald’s is slashing labor costs, maintaining its prowess among franchise-driven ROI.
A side serving of share buybacks hasn’t hurt either, slicing the share count by a quarter over the last decade. An expected steady earnings per share CAGR of 6% until 2026 keeps analysts nodding along.
Dreaming of the Dividend Throne
McDonald’s is knocking on the king’s door with a forward dividend yield of 2.4%, upping the ante for 48 years straight. Just a couple more hikes and it’ll join the Dividend Kings’ coveted circle—companies with a half-century streak of dividend hikes.
For further reading on McDonald’s revenue expectations, take a glance at InvestorPlace. If you’re curious about McDonald’s competitor strategies, check this piece on QSR Magazine, laying down how fast-food chains are shaping their menus in 2024.
Leo Sun, with no stake in McDonald’s stocks and using data from The Motley Fool, underscores that McDonald’s has been a stalwart through many a downturn.
And remember, every burger flipping behind those arches still screams opportunity.
