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what it is
McDonald’s mostly collects rent, royalties, and fees from franchisees who run 95% of its restaurants.
how it gets paid
Last year S made $26.9B in revenue. Franchised rents and royalties was the main engine at $15.8B, or 59% of sales.
why it's growing
Revenue grew 3.7% last year. The key number was the -4.42% EPS miss.
what just happened
The latest quarter missed expectations, with EPS at $3.03 versus the $3.17 estimate.
At a glance
A++ balance sheet — fortress balance sheet — as safe as it gets
85/100 earnings predictability — you can trust these numbers
26.2x trailing p/e — priced about right
2.5% dividend yield — cash in your pocket every quarter
40.0% return on capital — every dollar works hard here
xvary composite: 84/100 — above average
What they do
McDonald’s mostly collects rent, royalties, and fees from franchisees who run 95% of its restaurants.
This business wins because you are not betting on burger flips. You are betting on a global rent machine. McDonald’s has 44,599 restaurants, 95% franchised, which means franchise model → other people run the stores → your company keeps the high-margin fees. That helps produce a 46.1% operating margin and a 40.0% return on capital.
How they make money
$26.9B
annual revenue · their business grew +3.7% last year
Franchised rents and royalties
$15.8B
+4.0%
Company-operated restaurant sales
$9.7B
+2.0%
Initial franchise fees
$0.9B
+3.0%
License and affiliate revenue
$0.3B
+1.0%
Other revenue
$0.2B
0.0%
The products that matter
global restaurant system
McDonald's restaurants
44,599 locations · $26.9B revenue
it's the entire $26.9B revenue engine, spread across 44,599 restaurants. the menu gets the headlines. the scale is what matters.
core
franchised operating model
Franchise economics
34.7% net margin
a 34.7% net margin on $26.9B of revenue tells you the model is doing the heavy lifting. this is why McDonald's can look more like an annuity than a typical restaurant operator.
margin engine
shareholder payout stream
Dividend base
2.5% yield
the stock pays you 2.5% a year in dividends. that does not make it a bond substitute, but it does raise the bar for operational slippage.
income layer
Key numbers
$15.00
fy2027 eps est
$37B
fy2029 rev est
26.2x
trailing p/e
2.5%
dividend yield
Financial health
A++
strength
- balance sheet grade A++ — the absolute highest — fortress balance sheet
- risk rank 1 — safer than 95% of stocks
- price stability 100 / 100
- long-term debt $39.5B (15% of capital)
- net profit margin 36.9% — keeps 37 cents of every dollar in revenue
A++ with balance sheet grade and risk rank standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in MCD 3 years ago → it's now worth $12,970.
The index would have given you $13,880.
source: institutional data · total return
What just happened
missed estimates
The latest quarter missed expectations, with EPS at $3.03 versus the $3.17 estimate.
That is a -4.42% miss. Management had already flagged pressure on sales growth, and the setup suggests investors are watching traffic trends more than small margin moves.
$19.9B
revenue
$3.03
eps
46.1%
gross margin
the number that mattered
The key number was the -4.42% EPS miss, because a premium stock with only 7% near-term upside does not get much room for small mistakes.
-
mcdonald’s might see an easing of pressure on revenues in 2026.
-
for much of 2025, the fast-food purveyor reported solid same-store sales, both at home and abroad.
-
at press time, management was preparing to release fourth-quarter results.
-
we suspect that sales growth came under stress in the period.
-
the company’s core low-to-middle-income customer class, given stubborn inflation and increased job uncertainty, decided to cut back on dining out in order to have more cash for gift-giving in the holiday season.
source: company earnings report, 2026
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What could go wrong
the #1 risk is pressure on lower-income customer traffic. McDonald's works because it can be both convenient and affordable. If it stops feeling affordable, the model feels it fast.
med
lower-income traffic weakness
Management commentary on this page already points to stubborn inflation and job uncertainty for the core customer base. That's company-specific, and it matters because this brand still depends on everyday frequency.
If traffic slips, the hit lands directly on the $26.9B revenue base and can pressure franchisee profitability at the same time.
med
same-store sales deceleration
The recent news flow says same-store sales were solid for much of 2025, but also hints that growth came under stress later in the period. A stock priced at 26.2x earnings does not leave much room for stagnant comps.
If same-store sales flatten for multiple quarters, the market can still like the business and dislike the stock.
med
margin normalization
A 34.7% net margin is exceptional. It is also the number carrying the story. If pricing softens or cost pressure rises, there is more room for margins to move down than up.
Even a modest reset in that margin would matter because investors are paying a premium for stability, not for rapid growth.
The combined risk picture is simple: any sustained pressure on traffic or pricing power threatens the economics behind a business currently earning 34.7 cents on every revenue dollar.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next quarterly report
Watch whether revenue stays near the current $7.1B quarterly run rate and whether EPS keeps building from the latest $3.18.
trend
same-store sales tone
This is the fastest read on whether McDonald's is still winning on traffic, pricing, or both.
risk
margin durability
A 34.7% net margin is the unusual part. If that number slips, the valuation argument changes with it.
metric
institutional flow
Three straight quarters of net buying helped support the quality narrative. A reversal would be worth noticing.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts do not see a strong short-term edge either way.
risk profile
safest 5%
stability score 1 — lower risk of permanent damage than almost any stock in the market.
chart momentum
average
technical score 3 — the chart is acting normal, which is usually what mature compounders do.
earnings predictability
85 / 100
management has a long record of producing numbers close to expectations. You are buying steadiness more than surprise.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 1,574 buyers vs. 1,383 sellers in 3q2025. total institutional holdings: 0.5B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$278
$403
$319
current price
$341
target midpoint · +7% from current · 3-5yr high: $505 (+60% · 14% ann'l return)
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The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
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