Showing posts with label McDonald. Show all posts
Showing posts with label McDonald. Show all posts

Thursday 28 September 2023

MCDONALD

 





































Revenue declined over the studied period.  The PBT margins were lower in the first half of this period, and higher the latter half of this period.  Though the revenue declined, the PBT remained flat throughout this period, due to the higher PBT margin in the latter half.


Quality:  Good

Management:  Good

Valuation:  -

Growth:  Flat, no growth.




Monday 18 May 2015

Is McDonald's Losing Its Economic Castle?




















Summary

  • Is there really much to like about McDonald's anymore?
  • Let's walk through its challenges, and whether it means the company's Economic Castle is deteriorating.
  • We give our high-level thoughts on the turnaround plan and disclose our fair value estimate of shares.
  • We also have some interesting ideas at the end of the article that many may be overlooking.
What in the world is an Economic Castle?

Berkshire Hathaway's Warren Buffett has popularized the concept of an "economic moat," perhaps best described in common language as sustainable competitive advantages. But an Economic Castle? Are we just confused?

In short, no.

Whereas economic moat analysis focuses on the duration of a company's economic profit stream, as measured by return on invested capital less the costs of which to attain that capital, economic castle analysis focuses on the magnitude of economic profit creation over the realizable near term.

Unlike the substantial duration risk inherent to predicting economic profits 20, 30 or more years into the future, the economic castle framework posits that the strongest performing companies during certain phases of the economic cycle will be those that generate the most economic value over the foreseeable future.


Friday 21 September 2012

The Business of McDonald

Business Summary

McDonald's Corporation is the world's biggest fast food chain. Net sales break down by type of restaurants as follows:
- group-owned restaurants (67.7%): at the end of 2011, owned 6,435 restaurants;
- franchised and affiliated restaurants (32.3%): 23,456 franchises and 3,619 affiliates.

The group also manages the restaurant chain Pret A Manger located in the United Kingdom.

Net sales are distributed geographically as follows:

  • the United States (31.6%), 
  • Europe (40.3%), 
  • Asia/Pacific/Middle East/Africa (22.3%) and 
  • other (5.8%).


McDonald's Corporation : Income Statement Evolution

McDonald's Corporation : Finances - Leverage

McDonald's Corporation : Balance Sheet Analysis

McDonald's Corporation : Price Earning Ratio

McDonald's Corporation : EPS Dividend

McDonald's Corporation : Consensus detail

McDonald's Increases Quarterly Dividend 10%


McDonald's Corporation : McDonald's Increases Quarterly Dividend 10%

09/20/2012 | 05:31pm US/Eastern
   By Nathalie Tadena 
 
McDonald's Corp. (MCD) raised its quarterly dividend 10%, a shareholder-friendly move that demonstrates the company's confidence in its long-term strength.
The seven-cent increase brings the quarterly payout by the world's largest fast-food chain to 77 cents a share. The dividend carries a yield of 3.3%, based on Thursday's closing price.
The increase will cost McDonald's about $282.4 million more a year, based on the number of shares outstanding as of June 30. The company had $2.48 billion in cash and cash equivalents at the end of its second quarter.
McDonald's has raised its dividend every year since paying its first dividend in 1976.
The company has touted the efficiency of its global operations and diverse menu for returning a strong profit margin, but lately, higher costs for food, labor, occupancy and business investment are hurting its profitability.
In July, McDonald's reported second-quarter earnings fell 4.5% as global economic troubles pressured the company's margin and consumer confidence becomes an issue world-wide.
Shares closed at $93.15 and were unchanged after hours. The stock is up 5.1% over the past three months.



McDonald's Corporation Technical Analysis Chart | 4-Traders

McDonald's Corporation Technical Analysis Chart | 4-Traders

Tuesday 18 September 2012

McDonald's Corporation

Chart forMcDonald's Corp. (MCD)




McDonald's Corp. (MCD)

-NYSE
Prev Close:92.14
Open:N/A
Bid:91.80 x 700
Ask:92.75 x 400
1y Target Est:99.13
Beta:0.3
Next Earnings Date:19-Oct-12MCD Earnings announcement
Day's Range:N/A - N/A
52wk Range:83.74 - 102.22
Volume:0
Avg Vol (3m):5,523,360
Market Cap:92.92B
P/E (ttm):17.31
EPS (ttm):5.32
Div & Yield:2.80 (3.10%)
Currency in USD.

Thursday 29 July 2010

The Dividend Play: High Growth vs. High Yield


The Dividend Play for a Lifetime


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Last week I highlighted Yum! Brands (NYSE: YUM) as the best China play that wasn't Chinese. As the company behind such brands as KFC and Taco Bell, Yum! offers a compelling prospect for gain. McDonald's (NYSE: MCD)also allows dividend investors to reap payouts for a lifetime, and has a few less-obvious catalysts up its sleeve to unlock value.
High growth vs. high yield
Over the years, McDonald's operational performance has been exceptional, leading to its ability to pay and increase dividends for decades. The restaurant titan currently yields 3.1%, or $2.20 per share. That dividend has more than tripled over the past five years. Nice if you owned the stock since then, I hear you grumble. As a dividend investor, you need to consider how your company might increase its payouts in the future. Knowing the dividend growth rate is as important as knowing the dividend.
Consider the companies in the following table:
Company
Dividend Yield
5-Year Dividend Growth Rate
McDonald's
3.1%
31.3%
Procter & Gamble (NYSE: PG)
3.1%
11.9%
Frontier Communications (NYSE: FTR)
9.7%
0.0%
Annaly Capital (NYSE: NLY)
15.2%
6.9%
Source: Capital IQ.
While McDonald's and Procter & Gamble offer lower yields, they also have the ability to raise their dividends because of their strong consumer franchises. In fact, it's difficult to think of better consumer companies.
On the other hand, both Frontier and Annaly are less able to sustainably deliver dividend growth. While their yields are both sizable, the prospects for future gains are limited. Frontier operates in the declining fixed-line telecom space, and just cut its payout as it integrates some rural operations recently acquired from Verizon.
Meanwhile, Annaly has been able to increase its yield because net interest margin has increased as interest rates dredged the bottom. While Annaly is a nice play in disinflationary times, interest rates won't remain low forever, so there's likely to be a hiccup in its dividend at some point. Those criticisms, though, don't mean either company isn't worth owning -- I own both -- but rather a reminder that you need to know the sustainability of your dividends. Blending high payouts with high dividend growers could make a lot of sense. (I also own Procter & Gamble.)
McDonald's occupies something of a middle ground, and its recent massive increase in its payout is just the beginning. There are good signs that the company has plenty more in store.
Two hidden dividend sources
McDonald's has indicated that for the future it intends to pay out all its free cash flow. Now, some of that cash will go to repurchase shares. In September 2009, McDonald's authorized a $10 billion repurchase plan, and the company has wasted no time in snapping up shares. It bought back about $1 billion in shares in the recent quarter, and nearly $480 million the quarter before that.
But the rest of that cash looks earmarked for dividend increases, which could be very significant.
McDonald's also has at least two other potential opportunities to unlock cash. The company has been undergoing significant refranchising, selling off its company-operated stores to franchisors, and it now operates just 19% of its locations. That's great news, because franchise fees allow McDonald's to realize a better-than-80% margin on franchised stores. In contrast, its company-operated stores have less than a 20% operating margin. By refranchising more stores, McDonald's has been increasing its margins and freeing capital tied up in its stores, even though refranchising makes revenue growth look sluggish.
OK, McDonald's is a mature franchise, even if it does have a few growth areas left, such as China. So McDonald's can't post the type of stellar top-line numbers that quickly growingChipotle (NYSE: CMG) and Buffalo Wild Wings (Nasdaq: BWLD) are able to. Those companies can take advantage of store build-out and increasing efficiency to grow margins, which is why McDonald's spun off Chipotle more than four years ago so that the market would appreciate this distinction. Still, according to perhaps the most honest gauge of retail -- same-store sales -- McDonald's is truly holding its own.
The second hidden store of value is in McDonald's real estate holdings. Even as the company sells off franchises, it maintains the rights to most of its land and buildings. Some of that real estate is in prime locations and has been sitting on the company's books at cost for decades.
The mechanism that Mickey D's might use to unlock that value is unclear, but the value is certainly there. And given how CEO Jim Skinner is pulling out all the stops to make the company a more efficient user of capital, it won't be surprising if he gets that value back to shareholders somehow. I don't factor that into my valuation below, but it offers some potential upside nonetheless.
An apple pie to go
A quick dividend discount valuation suggests that McDonald's may be undervalued. Assuming annual dividend growth of 10% in years 1-5, 7% in years 6-10, and a 2% terminal increase, McDonald's shares should be valued at $82. OK, so you don't think McDonald's dividend can grow at 2% for that long? The current price of $70 implies the same growth rates as above, except no dividend increase ever again after year 10. Given the company's willingness to return all its free cash flow, I'm willing to bet that the company can do much better than no dividend growth after year 10. Are you?