McDonald's (MCD) Stock Forecast & Price Target

McDonald's, as the largest restaurant owner-operator globally with system sales projected at $131 billion in 2024, continues to leverage its successful franchise model, which generates approximately 60% of its revenue from franchise royalty fees and lease payments. The company has demonstrated solid growth in same-store sales (SSS), particularly in its international developmental/licensed (IDL) segment, with a notable 4.1% increase, driven by performance in markets such as Japan and a recovery in the Middle East. Furthermore, McDonald's anticipates margin expansion in company-operated stores (McOpCo) and a rejuvenation of its marketing and innovation strategies, combining value with product offerings to further enhance growth prospects in the upcoming periods.

McDonald's reported a 4Q24 EPS of $2.83, falling slightly short of the $2.85 consensus, driven by lower company margins and increased operating expenses that overshadowed gains from franchise margins. The company’s guidance for 2025 indicates a decrease in expected operating margins, reduced from 47.2% to 46.7%, in light of pressures from food safety recovery efforts and declining same-store sales, which fell by 1.4%. Key risks impacting McDonald's outlook include potential deterioration in economic conditions, challenges in achieving expected same-store sales and EBITDA growth, and uncertainties surrounding the execution of strategic initiatives.