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McDonald's Corp - Stock Quote MCD

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Wide-Moat McDonald's to Exit Russia; Shares Still Rich as We Maintain Our $227 Fair Value Estimate

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Wide-moat McDonald's announced its exit from the Russian market with a May 16 press release detailing its plans to disassociate from its approximately 850 stores in the country. This move was already contemplated in our base-case scenario, with our forecasts stripping out the revenue (9%), operating profit (3%), and forward unit growth from Russia and Ukraine. Consequently, we anticipate no material changes to our $227 fair value estimate. Our view appears to have been priced in to the markets already, with minimal price action in early trading. The shares continue to look expensive at current market prices. 

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McDonald's Corp's Company Profile

Business Description

McDonald’s is the largest restaurant owner-operator in the world, with 2021 system sales of $112 billion across more than 40,000 stores and 119 countries. McDonald’s pioneered the franchise model, building its impressive footprint through partnerships with independent restaurant franchisees around the world. The firm earns nearly 60% of its revenue from franchise royalty fees and lease payments, with the remainder coming from company-operated stores across its three core segments: the United States, internationally operated markets, and international developmental/licensed markets. McDonald’s owns 55% of the real estate and 80% of the buildings in its franchise system, offering it substantial leverage in maintaining quality standards and consistency.

110 North Carpenter Street
Chicago, IL, 60607
T +1 630 623-3000
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 200,000

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