McDonald's (MCD) Stock Forecast & Price Target

McDonald's is experiencing strong comparable sales growth, reporting a 26% increase compared to the previous year and approximately 15% compared to 2019, largely driven by successful promotions such as the Monopoly campaign. The company has raised its 2026 comparable sales and earnings per share projections, citing improved transaction trends and anticipating continued growth from menu innovation, digital sales, and service enhancements. Additionally, McDonald’s robust revenue structure, with around 60% derived from franchise royalties and lease payments, positions it favorably for sustained profitability as it continues to leverage its franchise model across a vast global network.

The excerpts indicate that McDonald's is facing a challenging environment, with comparable sales showing a 120 basis points deceleration in September and signs of industry-wide sales softness linked to recent consumer pullbacks. Additionally, the potential for an economic recession poses risks to restaurant sales, margins, and profits, as consumers may reduce their frequency of visits and spending. Lastly, with moderating traffic trends in the U.S. and expectations for lower earnings growth, the outlook for McDonald's appears less favorable, suggesting limited opportunity for earnings upside amid an above-historical average valuation.