MCD – Market expectations are for record-high Uniform ROA, but management may be concerned about growth, franchisees, and menu items

• McDonald’s Corporation (MCD:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 33.7x Uniform P/E, implying bullish expectations for the firm. However, management may be concerned about growth, franchisee alignment, and their chicken and breakfast menu items
  
  

• Specifically, management may be overstating the strength of their alignment with franchisees and the benefits of their ZOOM timer on drive-thru experiences, and they may be concerned about their franchise fee arrangements. Furthermore, they may lack confidence in their ability to balance check and transaction growth, compete in the breakfast and chicken segments, and continue to reduce average order times. Additionally, management may lack confidence in their ability to sustain comp sales, free cash flow, and traffic growth rates, and they may be concerned about the progress of their chicken product tests. Moreover, they may be downplaying concerns about their capex spending, capital investments, and seasonality. Finally, management may lack confidence in their ability to sustain US performance, continue to reduce G&A costs, and integrate their technology acquisitions