 | This ought to be an easy call for just about anyone because everyone already knows the stock is cheap. Anyone who looks at the company's stock chart can see the stock is at the lowest it's been in a year. Everyone knows the company's history and everyone knows the problems they're having with suppliers in China. In fact almost everyone knows their entire menu. |
The Company
McDonald’s Corporation (MCD) franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company’s restaurants offer various food items, soft drinks, coffee, and other beverages, as well as breakfast menus. As of December 31, 2013, it operated 35,429 restaurants, including 28,691 franchised and 6,738 company-operated restaurants. The company was founded in 1940 and is based in Oak Brook, Illinois. (Daily Chart) (Weekly Chart)
 Daily Chart | The Fundamentals 17 August 2014 Price $93.79 1yr Target $101.80 1yr Cap Gain 8.54% Dividend $3.24 Yield 3.45% 1yr Tot Return 11.99% 3yr EarnGR 6.54% 3yr DivGR 11.22% Payout Ratio 58.80% EPS (ttm) $5.51 P/E 16.99 PEG 2.76 |
The Technicals
From the perspective of the RSI, the stock is oversold. From the perspective of the MACD, the stock's downward momentum has been subsiding since the third week in July and has actually started to turn up during just this last week. From the perspective of the ADX, the downward pressure is evaporating and the ADX is actually starting to reverse. Technically this stock is setting itself up for a nice move higher.
Conclusion
McDonald's Corp is a favorite of the Dividend Growth Investors because of its dividend yield of 3.45%. In addition, it's been increasing those dividends every year for the last 38 years. It also has a P/E ratio of only 16.99 and an estimated one year total return on investment of 11.99%.
With earnings estimates of $5.57 by the end of 2014, $6.04 by the end of 2015, $6.63 by the end of 2016, and $7.39 but the end of 2017, and an average expected P/E ratio of 18, the stock of McDonald's could easily be $108.72 in 2015 (+15.91%), $119.34 in 2016 (+27.24%), and $133.02 in 2017 (+41.82%) even without taking into consideration its dividend.
With numbers like this, McDonald's Corp appears to be a nice fit for my accounts.
With earnings estimates of $5.57 by the end of 2014, $6.04 by the end of 2015, $6.63 by the end of 2016, and $7.39 but the end of 2017, and an average expected P/E ratio of 18, the stock of McDonald's could easily be $108.72 in 2015 (+15.91%), $119.34 in 2016 (+27.24%), and $133.02 in 2017 (+41.82%) even without taking into consideration its dividend.
With numbers like this, McDonald's Corp appears to be a nice fit for my accounts.
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Cracker Barrel Old Country Store 13 August 2014
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