QS Research · Michael Burry's Scion Capital analyst template · 2006
MCDONALDS CORP (MCD)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case 0% · downside -27% · upside +19%
Base case is today's 17.4x EV/EBITDA on TTM EBITDA of $13.51B: EV $235.17B and equity $195.82B, essentially the $277.45 price, so base case is 0%. Downside uses 13.5x (QSR): 13.5 x $13.51B = $182.4B EV, less $39.36B net debt = $143.0B equity, divided by 705.78M shares = about $203, -27%; the FCF cross-check at a 5.0% yield gives about $212, -23%. Upside uses 20.1x (CMG): 20.1 x $13.51B = $271.6B EV, less net debt = $232.2B equity, divided by 705.78M shares = about $329, +19%; the FCF cross-check at a 3.0% yield gives about $354, +28%. The market is not missing much: U.S. comps are -0.2% with negative guest counts, Q3 revenue missed, and no source gives guidance, while net debt is 2.9x EBITDA and cash returned exceeds FCF. I pass; the U.S. value relaunch could re-rate the stock, but at 21.8x TTM P/E and a 3.8% FCF yield there is no margin of safety and risk/reward is roughly 1:1.
Key numbers
- Share price: $277.45
- Market cap: $195.82B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $27.78B
- EV / EBITDA (TTM): 17.4x
- P/E (TTM): 21.8x
The 15 boxes
- ✓ 1. Long-form business notes
Over FY2020–FY2025 the XBRL record shows revenue of $19.21B (FY2020) rising to $26.89B (FY2025), with a flat patch in FY2021–FY2022 ($23.22B, then $23.18B) and growth in each of FY2023, FY2024 and FY2025. Operating income rose from $7.32B to $12.39B across the same span, and net income ($8.56B in FY2025) stays below operating income in every year of the window, so the profitability read rests on operating earnings rather than a one-off. The company is strongly cash generative: operating cash flow of $10.55B and capex of $3.37B in FY2025, with buybacks of $2.06B, cash down to $774.0M and equity of −$1.79B. The two 10-K Item 1 sources as supplied contain only headings and page markers, so segment mix, franchising terms, unit economics and the FY2020-to-FY2025 business narrative could not be sourced here.
- ✓ 2. Competitive advantage
The supplied 10-K text describes a broad IEO competitive set and competition on price, convenience, service, experience, menu variety and product quality, but it does not explicitly name a durable moat such as brand, cost, network or switching costs. The financial table shows revenue rising from $19.21B in FY2020 to $26.89B in FY2025 and operating income from $7.32B to $12.39B, with FY2025 operating cash flow of $10.55B against capex of $3.37B. That record is consistent with a strong competitive position, but the sources do not provide margin, ROIC, or market-share data to prove durability.
- ✓ 3. 10-Q takeaways
Q3 2026 was modest: global comparable sales rose 1.5% while U.S. comparable sales fell 0.2%; total revenues rose 1% to $7,157 million, operating income rose 7% to $3,595 million, and diluted EPS rose 10% to $3.51 after $56 million of pre-tax restructuring charges. Cash returns remained large, with $1.3 billion of Q3 2026 dividends and $519 million of Q3 2026 buybacks, and the quarterly dividend was raised 4% to $1.93. The 10-Q flags U.S. company-owned margin pressure from inflation and gives long-term Strategy targets; the S29 risk-factor update only references the prior risk discussion.
- ✓ 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
- ○ 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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