QS Research · Michael Burry's Scion Capital analyst template · 2006
MCDONALDS CORP (MCD)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -23% · upside +18%
At $276.52 (N1) MCD trades at 17.4x TTM EV/EBITDA (N27), 21.7x P/E (N30) and a 3.8% FCF yield (N31), with TTM EBITDA of $13.51B (N14) and net debt of $39.35B (N23). Holding today's 17.4x multiple gives a base value at today's price, or 0%; 14.0x on the same EBITDA gives about $212 (-23%) and 20.0x gives about $327 (+18%) over 705.78M shares (N5), so reward/risk is only about 1.1:1 and neither the long nor short rule is met. The market is not missing the franchise quality - Q3 2026 adjusted EPS rose 11% to $3.57 and the dividend was raised 4% - it is discounting U.S. negative guest counts and a 19.1% drawdown from the 52-week high (N2). I would watch, not own, until U.S. traffic turns or the multiple compresses toward the 14x downside case.
Key numbers
- Share price: $276.52
- Market cap: $195.16B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $27.78B
- EV / EBITDA (TTM): 17.4x
- P/E (TTM): 21.7x
The 15 boxes
- ✓ 1. Long-form business notes
Across the six fiscal years in the XBRL extract, MCD's revenue rose from $19.21B (FY2020) to $26.89B (FY2025) with only one down year (FY2022, -$0.04B), and operating income moved from $7.32B to $12.39B while net income went from $4.73B to $8.56B. Operating cash flow reached $10.55B in FY2025 against capex of $3.37B, and capex roughly doubled over the window. Cash return via buybacks peaked at $3.90B in FY2022 and has stepped down to $2.06B in FY2025, while the cash balance fell from $3.45B (FY2020) to $774.0M (FY2025) and total equity stayed negative every year. The narrative Item 1 business descriptions (segments, franchising, unit economics) in the latest and oldest 10-K were not available as text, so this section is built entirely on the DATA table.
- ✓ 2. Competitive advantage
The sources show a scaled, high-margin, cash-generative system rather than a commodity restaurant operator: FY2025 operating income was $12.39B on revenue of $26.89B (about 46%, calculated from the XBRL figures) versus $7.32B on $19.21B in FY2020, and operating cash flow beat net income in every year FY2020-FY2025. Book equity is negative (-$1.79B at FY2025-12-31) because of buybacks, not losses, so return tests have to be done on cash, not book value. Competition is described only by category - the whole informal eating out segment, from QSR to convenience stores, cafés and juice bars - with price, convenience, service, experience, menu variety and product quality as the battlegrounds; no individual rival is named and no ROIC or comparable-sales number is given in these sources.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) showed slowing top-line: global comparable sales +1.5% and consolidated revenues +1% to $7,157M, with U.S. comps down 0.2% on negative guest counts offset by check growth. Earnings still grew: operating income $3,595M (+7%; $3,651M adjusted, +8%) and diluted EPS $3.51 (+10%), helped by $(97)M of gains on sales of restaurant businesses in the quarter — a one-off inside operating income, while $56M of restructuring charges were booked in impairment and other charges. The company returned cash ($1.3B dividend, $519M of buybacks in the quarter) and raised the dividend 4% to $1.93; neither the 10-Q nor the 4 Nov 2026 release gives numeric guidance.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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