McDonald's (MCD) Valuation in Focus After Q3 Miss and Renewed Push for Value Deals

McDonald's (MCD) just posted its third-quarter results, and they tell an interesting story. Revenue and net income nudged higher compared to last year, but the company did not quite meet all expectations. This is largely because traffic among lower-income customers remains weak.

See our latest analysis for McDonald's.

Despite steady new menu launches and steady global sales growth, the recent 1-year total shareholder return of just 2.6% reflects investor caution after softer earnings and persistently weak foot traffic. While McDonald's has stabilized recently, momentum remains muted for now as management leans on value deals and buybacks to support confidence.

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With mixed results in the latest quarter and management placing renewed emphasis on value, does the current dip in performance signal hidden upside for buyers, or is McDonald’s stock already reflecting all the growth ahead?

Most Popular Narrative: 9.4% Undervalued

With the fair value from the most widely followed narrative set at $330.87, McDonald's trades below this mark, closing recently at $299.66. Investors are weighing steady growth expectations against soft consumer traffic and the company's sharpened focus on value as they debate if this undervaluation can persist.

McDonald's aggressive international expansion, particularly the sustained strategy to open 2,200 stores globally in 2025 (with a strong pipeline for 2026 and beyond, and a focus on China and other emerging markets), positions the company to capture urbanization-driven growth and higher consumption from a rising middle class. This approach may drive long-term double-digit revenue growth in international segments.

Read the complete narrative.

Looking for the surprising force behind this valuation? Consider ambitious global store plans, surging digital engagement, and a potential future profit margin that approaches industry giants. The narrative hinges on whether McDonald's can turn aggressive growth strategies into premium pricing power. Want to see the full blueprint?

Result: Fair Value of $330.87 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in traffic from low-income consumers and sustained input cost inflation could undermine the company's growth and put pressure on future earnings.

Find out about the key risks to this McDonald's narrative.

Story Continues

Another View: What Does the SWS DCF Model Say?

While many investors focus on analyst price targets, the SWS DCF model paints a more conservative picture for McDonald's. According to this method, the stock is actually trading above its estimated fair value. Could this signal that recent optimism has already been fully priced in? Or is there more room for growth than the model suggests?

Look into how the SWS DCF model arrives at its fair value.MCD Discounted Cash Flow as at Nov 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out McDonald's for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 870 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own McDonald's Narrative

If you have a different take, or would rather dig into the data and craft your own story, creating your own narrative takes less than three minutes. Do it your way

A great starting point for your McDonald's research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MCD.

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