McDonald's (NYSE:MCD) Sets New 1-Year Low - Time to Sell?

Key Points

• McDonald’s shares hit a new 52-week low at $229.20 and remain below both their 50-day and 200-day moving averages, reflecting sustained technical and sector-wide weakness.
• Analysts remain broadly positive, with a “Moderate Buy” consensus and an average price target of $298.52, despite several recent target-price cuts. The company also beat quarterly earnings expectations, although revenue slightly missed estimates.
• McDonald’s raised its quarterly dividend to $1.93 per share, marking its 50th consecutive annual increase, while its McDonald’s NEXT strategy aims to improve value, traffic and customer engagement. However, aggressive value promotions, weak traffic and execution challenges could pressure margins.

McDonald's Corporation (NYSE:MCD - Get Free Report)'s share price hit a new 52-week low on Monday. The stock traded as low as $229.20 and last traded at $230.5330, with a volume of 1047216 shares. The stock had previously closed at $231.89.

McDonald's News Summary

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

• Positive Sentiment: McDonald’s continues to appeal to income-focused investors after increasing its dividend for the 50th consecutive year. The company’s larger payouts provide support for the stock while management works through its operational challenges. Domino’s Pizza Pauses Dividend Growth While McDonald’s Accelerates Payouts
• Positive Sentiment: The company is pursuing its McDonald’s NEXT growth strategy, which is intended to improve value, traffic and consumer engagement. A successful execution could help restore sales momentum and support a recovery from the stock’s recent weakness. McDonald’s Is Undergoing a Massive New Growth Strategy
• Neutral Sentiment: McDonald’s disputed reports that artificial-intelligence models are independently determining Big Mac prices. The response may reduce some reputational risk, although continued discussion of personalized or dynamic pricing underscores customer sensitivity to affordability. McDonald’s Responds to Controversial AI Pricing Claims
• Neutral Sentiment: The return of the Monopoly promotion, including a $1 million prize, could provide a short-term marketing and traffic boost, but it is unlikely to materially change the company’s longer-term earnings outlook. McDonald’s Monopoly Returns
• Negative Sentiment: McDonald’s is competing more aggressively on value as customers remain price-conscious, but analysts point to execution gaps and weak traffic. The need for sharper promotions could pressure margins while rivals fight for the same budget-conscious consumers. Value Wars Intensify: Can McDonald’s Stay Ahead of QSR Rivals?
• Negative Sentiment: Shares are declining alongside other restaurant stocks, although Chipotle’s selling has been considerably heavier. McDonald’s stock is near a 52-week low and remains below its 50-day and 200-day moving averages, signaling persistent technical and sector-wide investor caution. Chipotle Sinks as Restaurant Stocks Dip

Analyst Ratings Changes

A number of equities analysts recently commented on the company. Needham & Company LLC reiterated a "buy" rating on shares of McDonald's in a research report on Monday, September 21st. Citigroup cut their target price on McDonald's from $310.00 to $305.00 and set a "buy" rating for the company in a research note on Thursday, September 24th. BMO Capital Markets reduced their price target on McDonald's from $335.00 to $310.00 and set an "outperform" rating on the stock in a report on Thursday, September 24th. Jefferies Financial Group dropped their price objective on shares of McDonald's from $260.00 to $250.00 and set an "overweight" rating for the company in a report on Tuesday, September 29th. Finally, Gordon Haskett cut their price objective on shares of McDonald's from $315.00 to $285.00 and set a "buy" rating for the company in a research report on Thursday, September 24th. One equities research analyst has rated the stock with a Strong Buy rating, twenty-two have assigned a Buy rating, thirteen have assigned a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat.com, McDonald's has an average rating of "Moderate Buy" and an average price target of $298.52.

McDonald's Stock Performance

The stock has a market capitalization of $163.81 billion, a price-to-earnings ratio of 18.80, a P/E/G ratio of 2.59 and a beta of 0.44. The business has a 50-day moving average of $259.04 and a 200-day moving average of $277.11.

McDonald's (NYSE:MCD - Get Free Report) last announced its quarterly earnings results on Tuesday, August 4th. The fast-food giant reported $3.38 earnings per share for the quarter, beating analysts' consensus estimates of $3.32 by $0.06. The business had revenue of $7.10 billion during the quarter, compared to analysts' expectations of $7.13 billion. McDonald's had a net margin of 31.72% and a negative return on equity of 572.06%. The business's revenue for the quarter was up 3.7% on a year-over-year basis. During the same period last year, the business earned $3.19 earnings per share. Equities analysts predict that McDonald's Corporation will post 12.85 earnings per share for the current fiscal year.

McDonald's Increases Dividend

The company also recently announced a quarterly dividend, which will be paid on Tuesday, December 15th. Investors of record on Tuesday, December 1st will be issued a dividend of $1.93 per share. This is a positive change from McDonald's's previous quarterly dividend of $1.86. The ex-dividend date is Tuesday, December 1st. This represents a $7.72 dividend on an annualized basis and a yield of 3.3%. McDonald's's dividend payout ratio (DPR) is 60.44%.

Institutional Investors Weigh In On McDonald's

Hedge funds have recently added to or reduced their stakes in the business. State Street Corp raised its position in McDonald's by 1.8% in the 2nd quarter. State Street Corp now owns 36,080,505 shares of the fast-food giant's stock valued at $9,752,921,000 after purchasing an additional 646,675 shares in the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC raised its holdings in McDonald's by 7.4% in the fourth quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 5,560,037 shares of the fast-food giant's stock valued at $1,699,314,000 after acquiring an additional 384,762 shares in the last quarter. Bank of New York Mellon Corp purchased a new position in McDonald's in the second quarter worth approximately $1,359,276,000. Arrowstreet Capital Limited Partnership grew its holdings in McDonald's by 17.2% during the 1st quarter. Arrowstreet Capital Limited Partnership now owns 3,637,785 shares of the fast-food giant's stock worth $1,130,587,000 after acquiring an additional 533,448 shares in the last quarter. Finally, Diamant Asset Management Inc. grew its holdings in McDonald's by 30,979.0% during the 1st quarter. Diamant Asset Management Inc. now owns 2,596,340 shares of the fast-food giant's stock worth $806,917,000 after acquiring an additional 2,587,986 shares in the last quarter. 70.29% of the stock is currently owned by institutional investors and hedge funds.

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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