MCD
McDonald's Corporation
Consumer Cyclical · Restaurants · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Perfect profitability score: The combination of a 46.1% operating margin, 31.9% net margin, and 14.4% return on assets drove a maximum score in the profitability factor, anchoring the overall composite.
- Solid but not top-tier growth and dividend scores: Consistent but modest annual growth of 3.7% in revenue and a payout ratio of 59.7% produced mid-range scores in those factors, keeping the total below the highest tier.
- Financial health complexity and theme absence: The negative debt-to-equity ratio introduced caution in the financial health factor, and the lack of assignment to any tracked macro theme contributed zero points, collectively limiting the total score.
Why Not Higher
- The absence of a macro theme assignment means McDonald's received no theme-related score contribution, representing a significant gap in the model's 100-point framework.
- Quarterly momentum softened materially into 2026Q1 across revenue, net income, and operating income, and the negative equity position from leverage tempered both the momentum and financial health scores.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $25,920,000,000 to FY2025's $26,885,000,000, a gain of +3.7%. Net income rose +4.1% over the same period, and diluted EPS increased +4.9% from FY2024 to FY2025.
The model reflects modest but positive growth across all three metrics; the mid-range score suggests the pace of expansion, while consistent, did not clear the threshold for a higher reward under the model's growth criteria.
In FY2025, McDonald's posted a net margin of 31.9%, an operating margin of 46.1%, and a return on assets of 14.4%.
These figures reflect an exceptionally efficient, largely franchised business model; the model awarded a perfect score in recognition of the combination of very high margins and solid asset returns.
In FY2025, McDonald's reported a debt-to-equity ratio of -22.32, an interest coverage ratio of 7.8, and total assets of $59,515,000,000.
The negative debt-to-equity ratio reflects a technically insolvent equity position driven by accumulated buybacks and retained-earnings deficits, which the model treats cautiously; however, the interest coverage of 7.8x in FY2025 signals adequate capacity to service debt, supporting a still-elevated score.
Over the last four reported quarters, revenue moved from $6,843,000,000 in 2025Q2 to $7,078,000,000 in 2025Q3, then declined to $7,008,000,000 in 2025Q4 and further to $6,517,000,000 in 2026Q1. Net income and operating income followed a similar arc, with operating income peaking at $3,357,000,000 in 2025Q3 before falling to $2,953,000,000 in 2026Q1.
The model captures a pattern of mid-period strength followed by a notable pullback into 2026Q1 across revenue, net income, and operating income, which tempers the momentum score to a mid-range level.
McDonald's dividends per share have risen each year from $5.66 in FY2022 to $6.23 in FY2023, $6.78 in FY2024, and $7.17 in FY2025, while the FY2025 dividend payout ratio stood at 59.7%.
The model recognizes a consistent multi-year dividend growth trend, but the payout ratio of 59.7% in FY2025 indicates that a meaningful share of earnings is committed to dividends, which may limit flexibility and contributes to a mid-range rather than top-tier score.
McDonald's is not currently assigned to any of the 24 tracked macro themes in the model.
The absence of a theme assignment is a neutral classification reflecting the model's current coverage, not a commentary on the company's business quality or prospects.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
McDonald's earned a composite score of 63.9/100 and is classified as a Core Holding Candidate with a Very Low risk rating, reflecting a business that combines exceptional profitability with modest but steady growth. In FY2025, the company posted a net margin of 31.9% and an operating margin of 46.1%, underscoring the efficiency of its largely franchised model, while revenue grew 3.7% year-over-year to $26,885,000,000. Financial health is nuanced: a technically negative debt-to-equity ratio of -22.32 reflects accumulated buybacks and retained-earnings deficits, though an interest coverage ratio of 7.8x provides adequate debt-service capacity. Recent quarterly momentum softened into 2026Q1, with revenue declining to $6,517,000,000 and operating income falling to $2,953,000,000, tempering an otherwise strong fundamental profile.
Plain English
McDonald's is a highly profitable, dividend-paying company that grows steadily but not explosively — it makes a lot of money on each dollar of sales, raises its dividend every year, but has taken on significant debt through buybacks and saw its most recent quarterly results dip noticeably.
Bull Case vs. Bear Case
Bull Case
- Exceptional profitability: McDonald's achieved a 46.1% operating margin and 31.9% net margin in FY2025, reflecting the powerful economics of its franchise-heavy business model.
- Consistent dividend growth: Dividends per share have risen every year from $5.66 in FY2022 to $7.17 in FY2025, demonstrating a reliable and growing income stream for shareholders.
- Steady top- and bottom-line growth: Revenue rose 3.7% to $26,885,000,000 and diluted EPS grew 4.9% from FY2024 to FY2025, showing consistent, positive momentum across key financial metrics.
Bear Case
- Technically insolvent equity position: A debt-to-equity ratio of -22.32 in FY2025 signals that accumulated buybacks and retained-earnings deficits have left McDonald's with negative book equity, a structural risk the model treats cautiously.
- Softening quarterly momentum: Revenue fell from a peak of $7,078,000,000 in 2025Q3 to $6,517,000,000 in 2026Q1, and operating income dropped from $3,357,000,000 to $2,953,000,000 over the same period, indicating a meaningful near-term pullback.
- Elevated payout ratio limits flexibility: The FY2025 dividend payout ratio of 59.7% means a substantial share of earnings is committed to dividends, potentially constraining reinvestment or financial maneuvering.
What Could Change the Picture
Bullish Triggers
- A sustained reacceleration in quarterly revenue and operating income beyond the 2025Q3 peak levels would signal that the recent pullback was temporary and that underlying demand remains robust.
- Faster annual revenue or EPS growth — meaningfully above the current 3.7% and 4.9% rates — would suggest the business is gaining incremental scale and could push the growth score higher.
Bearish Triggers
- A continued decline in quarterly operating income below the $2,953,000,000 recorded in 2026Q1 would raise concerns about whether the softening trend is structural rather than seasonal.
- Any deterioration in the interest coverage ratio below current levels of 7.8x, combined with the already-negative equity position, could meaningfully elevate financial risk concerns.
Risk Profile
Very Low RiskMcDonald's Very Low risk rating is supported by an interest coverage ratio of 7.8x in FY2025, which indicates adequate capacity to service its debt load despite a technically negative equity position driven by buybacks. However, the recent quarterly softening — with operating income declining from $3,357,000,000 in 2025Q3 to $2,953,000,000 in 2026Q1 — is a trend worth monitoring as a potential early signal of pressure on cash generation.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.