McDonald's: Rich Valuation, Low Consumer Confidence Suggest Waiting For A Better Entry Point

Alpha Mantra
249 Followers

Summary

  • McDonald's remains a global QSR leader with a strong dividend history, but current macro headwinds are pressuring growth and consumer demand.
  • Recent US sales declines are driven by low consumer confidence and price-sensitive customers trading down or leaving the QSR segment.
  • Management's value meal initiatives may help, but tariff risks and inflation could further erode margins or force more price hikes.
  • At a premium valuation and facing near-term headwinds, I rate McDonald's as a hold and would wait for a correction before buying.

Self Service Machine At McDonalds Restaurant At Amsterdam The Netherlands 13-6-2024

Robert vt Hoenderdaal/iStock Editorial via Getty Images

Thesis

McDonald’s Corporation (MCD) has been and continues to be a stalwart in the global QSR industry that needs no introduction, with 48 consecutive years of dividend history. The company has generated

This article was written by

249 Followers
I am a value focused investor, conducting fundamental research on sectors like but not limited to chemicals, homebuilders, building materials, industrials and metals & mining. I prefer to invest in stocks which are cheaply available and have a catalyst in the near future. My investment horizon ranges from a quarter to two years. I have over 3 years of active investing experience and served as buy side analyst at boutique research firm and family offices.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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