Analyst Note| Sean Dunlop |
Wide-moat McDonald’s reported strong third-quarter earnings, with global comparable sales up high single digits (6.9%) relative to 2019 levels. Strength was widespread, with all three operating segments turning positive against a prepandemic baseline, as the famous orders platform, a sustained volume boost from the chicken sandwich launch, and re-opened dining rooms pushed outperformance. We're raising our fair value estimate to $234 per share from $231 prior after adjusting for better digital traction and sustained strength in average check, offset by the incorporation of a 26% U.S. statutory tax rate in 2022 and beyond (up from 21% prior). Shares appear fairly valued at current prices, and we remain optimistic about the long-term benefits of the firm’s digital strategy, which could improve guest frequency and reduce customer churn as McDonald's leverages insights from those channels.