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MCD – Market expectations are for record-high Uniform ROA, but management may be concerned about delivery and drive-thru options, the market recovery, and their order platforms

February 5, 2021

  • McDonald’s Corporation (MCD:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 28.2x Uniform P/E. At these levels, the market has bullish expectations for the firm. However, management may be concerned about their delivery and drive-thru sales, the pace of the market recovery, and the launch of their orders platform
  • Specifically, management may lack confidence in their ability to sustain delivery sales improvements, drive monthly comp sales increases, and gain market share internationally through their drive-thru and delivery options. Moreover, they may have concerns about the launch of their orders platform, the impact of suppressed travel and tourism on sales in France, and the pace of the market recovery. Finally, management may lack confidence in their ability to execute brand and marketing investments, further secure expansion opportunities in China, and control their G&A expenses