September 4, 2018

MCD – Market expectations are for record-high Uniform ROA, but management has concerns about customer experience, growth rates, and price sensitivity


  • McDonald’s Corporation (MCD:USA)currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 25.5x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about customer experience, growth outside of the value segment, and consumer price sensitivity
  • Specifically, management may be exaggerating the quality of their customer experience offerings, and their ability to establish initiatives to improve the experience. Additionally, they may also have concerns about the sustainability of success from their mobile app, and the price sensitivity of the consumer. Moreover, they may be concerned about their ability to sustain their recent growth pace, and to drive growth across multiple segments outside of their value offerings. Furthermore, they may have concerns about their ability to reduce fresh beef service times, and to continue taking share in International Lead markets. Also, they may lack confidence in their ability to deliver balanced growth in both average check and comparable guest count in the U.S., and to offset margin compression as delivery orders grow
To read this Embedded Expectations Analysis report in its entirety, please log into the Valens Research web app. If you don't have an account, you can sign up for the 30-day trial.