Is McDonald's Corporation (MCD) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $281.44, McDonald's Corporation (MCD) trades 19% above TickerWorth's blended fair value of $236.24 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices MCD overvalued vs our estimate of what the business is intrinsically worth. Our fair value sits below the market, an implied -16.1% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.
One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values MCD at about $218.73 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.
The valuation discounts McDonald's Corporation's projected free cash flows at a weighted-average cost of capital (WACC) of 7.6%, with a long-run terminal growth rate of 2.5%. About 80% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 4.8% annual revenue growth for MCD. Our base case instead compounds to about 3.9% a year over the same forecast, so the market's implied growth is broadly in line with our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, MCD's modeled DCF value ranges from about $132.52 to $470.79 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what McDonald's Corporation would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of MCD's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind MCD's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $26,885,000,000 | McDonald's FY2025 10-K (accession 0000063908-26-000035, filed 2026-02-24); Q4/FY2025 release 8-K Ex-99.1 (accession 0000063908-26-000032): Total revenues FY2025 $26,885M (+4% reported, +2% constant currency, vs FY2024 $25,920M): franchised revenues $16,548M (rent + royalties, 62%), Company-operated sales $9,690M (36%), other $647M. Revenue is NOT the same thing as the ~$139B of Systemwide sales McDonald's headlines — ~95% of restaurants are franchised, and McDonald's books only its rent and royalty take on franchisee sales. CROSS-CHECK: H1 2026 revenue $13,616M, +6.4% on H1 2025's $12,799M (+3% constant currency — the weak dollar did half the work); TTM through 2026-06-30 = $27,702M. The base is unchanged; the new half-year belongs in Year 1. |
| Base EBIT margin | 46.1% | McDonald's Q4/FY2025 earnings release, 8-K Ex-99.1 (accession 0000063908-26-000032, filed 2026-02-11): GAAP operating income $12,393M / revenue $26,885M = 46.10%. This INCLUDES $229M of pre-tax restructuring charges ('Accelerating the Organization'); excluding them the margin is 46.95%. GAAP is kept deliberately: McDonald's has booked restructuring charges every year since 2023 ($291M in 2024, $229M in 2025, $99M in H1 2026), so they behave like a recurring cost rather than a one-off. RENT STAYS IN EBIT: the ~$1.6B of annual rent McDonald's pays on the land and buildings it sub-leases to franchisees sits inside 'franchised restaurants-occupancy expenses', which is why operating leases are kept OUT of net debt (see market.net_debt). CROSS-CHECK: H1 2026 GAAP operating margin 46.21% ($6,292M / $13,616M) vs 45.94% in H1 2025; TTM 46.22% ($12,805M / $27,702M). A ~46% operating margin is what a franchisor-landlord looks like: franchised margins (rent + royalty less occupancy cost) are ~90% of restaurant margin dollars. |
| Forecast revenue growth | 4% → 4% → 4% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation. Shared by every model in this tracker. |
| Beta | 0.61 | Assumption — Yahoo Finance 5Y-monthly beta via yfinance (0.414), Blume-adjusted: Published 5Y-monthly beta is 0.414 (yfinance, read 2026-10-03); my own regression of 59 monthly total returns against the S&P 500 gives 0.446, so the published figure is not a data error. NORMALIZED UP to 0.61 with the standard Blume adjustment (0.67 x 0.414 + 0.33 = 0.607), the same 'adjusted beta' Bloomberg publishes. This is CONSERVATIVE — it raises the discount rate and LOWERS the value. Reason: a 0.41 beta prices McDonald's equity barely above a Treasury (cost of equity 7.3%), and the window that produced it is dominated by a stock-specific slide (~$335 in early March 2026 to $231.89 at the 2 Oct close) that moved independently of a rising market — idiosyncratic risk the regression scores as LOW systematic risk. A levered company carrying ~$42B of debt and negative book equity is not a near-risk-free equity. THIS IS THE LARGEST SINGLE JUDGEMENT IN THE FILE: accepting the published 0.414 lifts the value from $218.73 to ~$269.54 (WACC 6.80% vs 7.58%), which would read as ~16% undervalued; each 0.1 of beta is worth roughly $18-20/share. |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability with every other company in this tracker. Not obviously generous or punitive for McDonald's: it is still opening ~2,600 restaurants a year (net ~2,100) and targets 50,000 by end-2028, but management itself guides the unit contribution down to ~2% of Systemwide growth by 2030 and says industry traffic is flat, so a perpetuity near nominal GDP is the honest middle. 3.0% adds ~$25/share ($243.99); 2.0% takes ~$21 off ($198.00). Must remain < WACC of 7.58% — and with a WACC this low, the terminal value is very sensitive to it (see caveats). |
| Diluted shares | 711M | McDonald's Q2 2026 10-Q (accession 0000063908-26-000073, filed 2026-08-07): Q2 2026 weighted-average diluted shares 711.1M (H1 2026 712.3M; FY2025 716.4M). 707.64M were outstanding at 2026-06-30. The count FALLS about 1% a year: buybacks ($2,056M in FY2025, $1,251M in H1 2026) more than offset option and RSU issuance (SBC $165M in FY2025). |
| Market price | $281.44 | Delayed quote · as of 2026-11-10 04:59 UTC |
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