DCF Studio

    MCD · NYQ · Consumer Cyclical

    McDonald's Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 237.35

    Market price

    USD 265.64

    Implied upside

    -10.7%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 10.2% of revenue against depreciation of 8.0%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 237.35-10.7%
    Exit multiple
    USD 265.30-0.1%
    Market price
    USD 265.64

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn6bn12bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 28.1bnUSD 28.9bnUSD 29.6bnUSD 30.4bnUSD 31.1bnUSD 31.9bnUSD 32.7bnUSD 33.5bnUSD 34.4bnUSD 35.2bn+2.5%
    EBITUSD 12.8bnUSD 13.2bnUSD 13.5bnUSD 13.9bnUSD 14.2bnUSD 14.6bnUSD 14.9bnUSD 15.3bnUSD 15.7bnUSD 16.1bn+2.5%
    NOPATUSD 10.2bnUSD 10.4bnUSD 10.7bnUSD 11.0bnUSD 11.3bnUSD 11.5bnUSD 11.8bnUSD 12.1bnUSD 12.4bnUSD 12.7bn+2.5%
    Add depreciation & amortisationUSD 2.3bnUSD 2.3bnUSD 2.4bnUSD 2.4bnUSD 2.5bnUSD 2.6bnUSD 2.6bnUSD 2.7bnUSD 2.8bnUSD 2.8bn+2.5%
    Less capital expenditureUSD -2.9bnUSD -3.0bnUSD -3.1bnUSD -3.2bnUSD -3.3bnUSD -3.5bnUSD -3.6bnUSD -3.7bnUSD -3.9bnUSD -4.0bn+3.8%
    Capex, % of revenue10.2%10.3%10.4%10.6%10.7%10.8%11.0%11.1%11.2%11.4%-
    Less increase in working capitalUSD -66.7mUSD -38.0mUSD -38.9mUSD -39.8mUSD -40.7mUSD -41.6mUSD -42.5mUSD -43.5mUSD -44.4mUSD -45.4m-4.2%
    Free cashflow to firmUSD 9.5bnUSD 9.7bnUSD 9.9bnUSD 10.2bnUSD 10.4bnUSD 10.6bnUSD 10.8bnUSD 11.0bnUSD 11.3bnUSD 11.5bn+2.2%
    Discount factor0.96770.90620.84860.79460.74410.69680.65250.61100.57220.5358-
    Present valueUSD 9.2bnUSD 8.8bnUSD 8.4bnUSD 8.1bnUSD 7.7bnUSD 7.4bnUSD 7.1bnUSD 6.8bnUSD 6.5bnUSD 6.2bn-
    Present Value Of The ForecastUSD 76.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.619Reported 0.431, pulled toward 1.0 (Blume)
    Cost of equity7.51%Risk-free + beta x equity risk premium
    Cost of debt5.44%Risk-free + 55bp, the spread for a AA rating at 7.8x interest cover. Book interest / average debt was lower, at 3.0%.
    Market capitalisationUSD 188.0bn77.4% of capital
    Total debtUSD 54.8bn22.6% of capital, book value as a proxy
    Tax rate20.8%Effective, capped at statutory
    WACC6.79%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 237.35

    66% of EV

    Forecast FCFF, final year
    USD 11.5bn
    Capex at depreciation, working capital in reinvestment
    USD 12.7bn
    Less reinvestment at g/ROIC (9.3% of NOPAT)
    USD -1.2bn
    Capitalised
    USD 11.6bn
    ROIC (reported)
    27.0%
    Terminal value, undiscounted
    USD 276.2bn
    Terminal value, discounted
    USD 148.0bn
    Enterprise value
    USD 224.1bn
    Less net debt
    USD 54.0bn
    Equity value
    USD 170.0bn

    Exit at 16.6x EBITDA

    Value per shareUSD 265.30

    69% of EV

    Terminal value, undiscounted
    USD 313.6bn
    Terminal value, discounted
    USD 168.0bn
    Enterprise value
    USD 244.1bn
    Less net debt
    USD 54.0bn
    Equity value
    USD 190.1bn

    Spread between methods: 11%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.79%375.19427.84503.88622.94835.06
    5.79%270.47296.24330.12376.44443.37
    6.79%205.41219.63237.35259.96289.70
    7.79%161.08169.49179.64192.07207.58
    8.79%128.94134.14140.27147.59156.43

    Outlined: this model. Green text: above today's price of 265.64. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year5.1%2.7%3.7%
    EBIT margin46.1%45.6%49.7%
    Discount rate-6.8%6.4%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.