McDonald's has had incredible dividend growth and has been a staple in many dividend investors portfolios. I've owned them for several years though only since 2012 in the blog portfolio. I think they are in for some struggle though in the short term. Their payout ratio is capped out and they are cutting back on their share repurchase program next year because they expect sales and free cash flow growth to be negligible.
Company Overview
Company Fundamentals
Fastgraphs Review: MCD has the name and history to be able to follow its P/E history as fair value instead of the Fastgraphs value. This is common with mega-cap companies. In MCD's case 17 P/E is fair value. I'll look to add at $91 which is fastgraph's fair value as that seems to be when larger pullbacks and bottoms form.
Earning Report Notes
Company and Industry specific commonly used acronyms and terms
Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.
McDONALD’S (MCD)
Last Updated: Q4-2014
Description: McDonald’s Corporation franchises and operates McDonald’s restaurants in the global restaurant industry. These restaurants serve menu at various price points providing value in 119 countries globally. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchise arrangements, and developmental licensees and foreign affiliated markets under license agreements. Under the conventional franchise arrangement, franchisees provide a portion of the capital required by initially investing in the equipment, signs, seating and decor of their restaurant businesses, and by reinvesting in the business over time.
How do they make money: Selling fast food meals to consumers.
Key Brands: McDonald’s.
Company Overview
United States
Europe
Asia-Pacific, Middle East, Africa (APMEA)
Japan: 30% of APMEA revenue but only 15% of income.
70 million customers a day
81% stores franchise. Highest profit margin is at franchises.
“Three Global Priorities” as long term goals
Optimize menu
Modernize customer experience
Broaden accessibility
Risks
None
Competitors
The Wendy’s Company (WEN)
Burger King World (BKW)
Yum! Brands (YUM)
Company Fundamentals
Company Stats
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014e
|
5y Avg
|
10y Avg
|
Share Price
|
$33.85
|
$44.33
|
$58.91
|
$62.19
|
$62.44
|
$76.76
|
$100.33
|
$88.21
|
$97.03
|
$91.49
|
$90.76
|
$71.55
|
EPS
|
2.04
|
2.3
|
1.93
|
3.76
|
4.11
|
4.58
|
5.27
|
5.36
|
5.6
|
6.1
|
5.382
|
4.105
|
EPS Growth
|
-
|
12.75%
|
-16.09%
|
94.82%
|
9.31%
|
11.44%
|
15.07%
|
1.71%
|
4.48%
|
8.93%
|
8.32%
|
15.82%
|
P/E
|
16.59
|
19.27
|
30.52
|
16.54
|
15.19
|
16.76
|
19.04
|
16.46
|
17.33
|
15.00
|
16.92
|
18.27
|
P/B
|
2.8
|
3.5
|
4.4
|
5.2
|
4.8
|
5.5
|
7.1
|
5.8
|
6.4
|
6.2
|
6.2
|
5.17
|
EPS growth is still incredible for a mega-cap company of MCD’s age.
Dividend Stats
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014e
|
5y Avg
|
10y Avg
|
Dividend
|
$0.67
|
$1.00
|
$1.50
|
$1.62
|
$2.05
|
$2.26
|
$2.53
|
$2.87
|
$3.12
|
$3.20
|
$2.80
|
$2.08
|
Dividend Yield
|
1.98%
|
2.26%
|
2.55%
|
2.60%
|
3.28%
|
2.94%
|
2.52%
|
3.25%
|
3.22%
|
3.50%
|
3.09%
|
2.81%
|
Share buyback %
|
0.00%
|
1.76%
|
3.30%
|
5.76%
|
3.52%
|
2.50%
|
3.35%
|
2.45%
|
1.09%
|
2.35%
|
2.64%
| |
Div Growth
|
-
|
49.25%
|
50.00%
|
8.00%
|
26.54%
|
10.24%
|
11.95%
|
13.44%
|
8.71%
|
2.56%
|
9.38%
|
20.08%
|
EPS Payout Ratio
|
32.84%
|
43.48%
|
77.72%
|
43.09%
|
49.88%
|
49.34%
|
48.01%
|
53.54%
|
55.71%
|
52.46%
|
51.81%
|
50.61%
|
Dividend growth will need to be slower at the 5y average to let EPS catch up.
Earning Report Notes
Q4 2013
EPS: +2%
U.S.: -1.4%
Europe: +1%
APMEA: -2.4%
China: -0.4%
2013: Revenue: +2%
EPS +4%
U.S.: -0.2%
Europe: 0%
APMEA: -1.9%
China: -3.6%
Margins: 18.4%
Opened 1,400 new stores. 275 in China.
Remodeled 1,529 stores
2014: $5.0b to shareholders ($4.9 in 2013)
~$3.3b dividends
~$1.6b share buybacks (significant drop but glad they are not sacrificing the dividend. Next year dividend raise will be small)
Tax: 32%
Focusing on McCafe coffee line.
Planning 1,500 - 1,600 new restaurants
US 250, Europe 320, APMEA 830 (300 in China)
1,000 remodels. This number has been consistent for several years (1,000 - 2,000)
Company and Industry specific commonly used acronyms and terms
None
Resources
Company Website: http://www.aboutmcdonalds.com/mcd.html
Investor Relations: http://www.aboutmcdonalds.com/mcd/investors.html
Morningstar: http://quotes.morningstar.com/stock/s?t=mcd
Transcripts: http://seekingalpha.com/symbol/mcdDisclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.
Great review
ReplyDeleteMcDonald’s has become not only the largest fast food restaurant organization, but is a symbol of globalization; literally changing eating habits around the world.
ReplyDeleteMcdonalds Company Profile