Investors Buy Large Volume of McDonald's Put Options (NYSE:MCD)

Key Points

• Bearish options activity increased: Investors purchased 47,332 put options on McDonald’s, 66% above the average volume of 28,464, signaling heightened downside protection or bearish speculation.
• Analyst targets were broadly reduced, though the consensus remains a “Moderate Buy” with an average price target of $316.39 versus shares trading near $248.50.
• McDonald’s continues to provide income and operational stability: The company reported quarterly EPS above expectations, maintains a $7.44 annualized dividend yielding about 3%, and has 70.29% institutional ownership.

McDonald's Corporation (NYSE:MCD - Get Free Report) was the recipient of unusually large options trading activity on Thursday. Investors bought 47,332 put options on the stock. This represents an increase of 66% compared to the average volume of 28,464 put options.

Analysts Set New Price Targets

Several research firms have recently weighed in on MCD. KeyCorp reduced their target price on McDonald's from $315.00 to $305.00 and set an "overweight" rating for the company in a report on Wednesday, August 5th. Argus cut their price target on McDonald's from $320.00 to $310.00 and set a "buy" rating on the stock in a research report on Wednesday, August 26th. TD Cowen reduced their price objective on McDonald's from $300.00 to $282.00 and set a "hold" rating for the company in a research note on Friday, September 11th. Citigroup decreased their price objective on McDonald's from $345.00 to $310.00 and set a "buy" rating for the company in a report on Thursday. Finally, Guggenheim lowered their target price on shares of McDonald's from $320.00 to $290.00 and set a "neutral" rating on the stock in a research report on Wednesday, August 5th. One research analyst has rated the stock with a Strong Buy rating, fifteen have given a Buy rating and eleven have given a Hold rating to the company's stock. According to MarketBeat.com, the stock presently has a consensus rating of "Moderate Buy" and an average price target of $316.39.

McDonald's Price Performance

Shares of MCD stock traded down $0.06 during midday trading on Thursday, hitting $248.50. The company had a trading volume of 3,410,266 shares, compared to its average volume of 3,966,950. The company's 50 day simple moving average is $266.07 and its 200 day simple moving average is $284.76. McDonald's has a 52-week low of $247.83 and a 52-week high of $341.75. The stock has a market cap of $175.85 billion, a price-to-earnings ratio of 20.18, a PEG ratio of 2.73 and a beta of 0.41.

McDonald's (NYSE:MCD - Get Free Report) last released its quarterly earnings results on Tuesday, August 4th. The fast-food giant reported $3.38 EPS for the quarter, topping the consensus estimate of $3.32 by $0.06. McDonald's had a negative return on equity of 572.06% and a net margin of 31.72%.The business had revenue of $7.10 billion during the quarter, compared to analysts' expectations of $7.13 billion. During the same quarter in the prior year, the business earned $3.19 earnings per share. The company's quarterly revenue was up 3.7% compared to the same quarter last year. Analysts anticipate that McDonald's will post 12.87 EPS for the current year.

McDonald's Dividend Announcement

The company also recently announced a quarterly dividend, which was paid on Wednesday, September 16th. Stockholders of record on Tuesday, September 1st were paid a $1.86 dividend. This represents a $7.44 annualized dividend and a dividend yield of 3.0%. The ex-dividend date was Tuesday, September 1st. McDonald's's dividend payout ratio (DPR) is 60.44%.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in MCD. Ascentis Wealth Management LLC grew its position in McDonald's by 4,008.8% in the second quarter. Ascentis Wealth Management LLC now owns 84,230 shares of the fast-food giant's stock valued at $22,768,000 after acquiring an additional 82,180 shares in the last quarter. Borer Denton & Associates Inc. boosted its stake in shares of McDonald's by 16.9% in the second quarter. Borer Denton & Associates Inc. now owns 13,859 shares of the fast-food giant's stock valued at $3,746,000 after purchasing an additional 2,000 shares during the period. Peterson Wealth Services grew its holdings in McDonald's by 3,294.5% during the 4th quarter. Peterson Wealth Services now owns 11,779 shares of the fast-food giant's stock valued at $3,600,000 after purchasing an additional 11,432 shares in the last quarter. HighTower Advisors LLC increased its stake in McDonald's by 7.1% during the 2nd quarter. HighTower Advisors LLC now owns 1,471,725 shares of the fast-food giant's stock worth $397,822,000 after buying an additional 97,060 shares during the period. Finally, Harbour Investments Inc. increased its stake in McDonald's by 84.4% during the 4th quarter. Harbour Investments Inc. now owns 35,510 shares of the fast-food giant's stock worth $10,853,000 after buying an additional 16,252 shares during the period. 70.29% of the stock is owned by hedge funds and other institutional investors.

Key Headlines Impacting McDonald's

Here are the key news stories impacting McDonald's this week:

• Positive Sentiment: Citigroup lowered its price target to $310 from $345 but maintained a “buy” rating, implying significant potential upside from current levels. Ticker Report analyst update
• Positive Sentiment: BTIG reaffirmed its “buy” rating with a $350 target, signaling that the firm expects McDonald’s brand strength, scale and eventual operating improvements to support a recovery. Benzinga analyst update
• Positive Sentiment: Analysts continue to view McDonald’s global brand value, menu innovation and restaurant remodels as potential catalysts, while the company’s long dividend-growth record supports its appeal to income-focused investors. Seeking Alpha brand value analysis
• Neutral Sentiment: Investor attention is centered on McDonald’s upcoming strategic update, where management is expected to outline plans for menu innovation, remodels and longer-term growth. Yahoo Finance investor update
• Negative Sentiment: McDonald’s CEO acknowledged execution problems as spending patterns increasingly split between higher- and lower-income consumers. That raises concerns that the company is losing value-focused diners while failing to fully capture stronger demand from affluent customers. 247WallSt consumer and execution analysis
• Negative Sentiment: Jefferies cut its price target to $325 from $350, while analysts continue to seek evidence that a sales recovery is achievable. The target reduction reinforces concerns about near-term growth and execution. Proactive Investors Jefferies update
• Negative Sentiment: Investors are questioning whether McDonald’s current valuation is supported by the cash the business generates after a difficult year for the shares. Yahoo Finance valuation analysis

About McDonald's

McDonald's Corporation is a global quick-service restaurant company that operates and franchises restaurants under the McDonald's brand. Its restaurants serve a menu that includes hamburgers, cheeseburgers, chicken sandwiches, French fries, breakfast items, desserts, salads, beverages and coffee. Offerings vary by market, and many locations provide drive-thru service, delivery and digital ordering through the McDonald's mobile app.

The company operates through a heavily franchised business model, with restaurants owned and operated by independent franchisees, affiliates and the company itself.

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