McDonald's Corporation (MCD) Intrinsic Value & DCF Valuation
Restaurants · NYSE
Current Price
$251.03
Intrinsic Value
$255.98
+1.9% margin of safety
What Is McDonald's Corporation's Intrinsic Value?
As of 2026-10-28, the base-case DCF model estimates the intrinsic value of McDonald's Corporation (MCD) at $255.98 per share, compared with a market price of $251.03, a margin of safety of +1.9%. The base case assumes 5.8% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $209.84 to $308.86. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is McDonald's Corporation (MCD) Undervalued?
At $251.03, MCD trades about 1.9% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Global Brand Recognition and Scale
McDonald's unparalleled brand recognition and vast global footprint create significant barriers to entry. This scale allows for operational efficiencies and purchasing power unmatched by most competitors.
↑Franchise System Efficiency
The highly standardized and efficient franchise model allows for rapid expansion and consistent customer experience. This system leverages local entrepreneurial drive while maintaining corporate control.
↑Customer Habit and Convenience
Decades of consistent service and ubiquitous locations have ingrained McDonald's into consumer habits. Its drive-thru and quick service model offer unparalleled convenience for busy individuals.
INVESTMENT RISKS
↓Geopolitical and Economic Instability
Global operations expose McDonald's to currency fluctuations, political unrest, and varying economic conditions. These factors can impact profitability and expansion plans in key markets.
↓Labor and Supply Chain Disruptions
Reliance on a large workforce and complex supply chains makes McDonald's vulnerable to labor shortages, wage inflation, and disruptions. These issues can affect service quality and operational costs.
↓Regulatory and Health Scrutiny
Increased government regulation on food safety, nutrition labeling, and labor practices can lead to higher compliance costs. Public health concerns also pose a reputational risk.
Base case
MCD base case valuation
Intrinsic Value
$255.98
Margin of safety
+1.9%
Expected annual return
+0.4%
Base case assumptions: 5.8% annual growth, 10.0% discount rate, 22.89x exit multiple, 5 year projection. Data as of 2026-10-28.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the MCD valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for McDonald's Corporation respond.
Open DCF Calculator for MCDCompany Overview
McDonald's Corporation operates and licenses its renowned fast-food chain worldwide, with a significant presence in both the United States and international markets. Their comprehensive menu offers classic items like hamburgers and cheeseburgers, a variety of chicken options including sandwiches and nuggets, alongside lighter choices such as wraps, french fries, and salads. For breakfast, patrons can select from offerings like biscuit and bagel sandwiches, breakfast burritos, and hotcakes. Additionally, the company provides oatmeal, an assortment of desserts including milkshakes, sundaes, and soft-serve ice cream, plus a selection of baked goods. A wide array of soft drinks, coffee, and other beverages completes their offering. By December 31, 2021, the corporation's global network encompassed 40,031 establishments. McDonald's Corporation, founded in 1940, has its main corporate office located in Chicago, Illinois.
Financial Metrics — MCD Stock Valuation Data
Revenue/Share (TTM)
$39.07
FCF/Share (TTM)
$10.94
ROIC (TTM)
17.8%
ROE (TTM)
-561.2%
P/FCF
22.9x
EV/EBITDA
15.4x
FCF Yield
4.37%
Debt/Equity
n/m
Based on trailing twelve-month data, MCD shows a free cash flow per share of $10.94 and a ROIC of 17.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 22.9x and FCF yield of 4.37% are important context metrics when evaluating MCD's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of MCD?
McDonald's Corporation currently generates $10.94 in free cash flow per share. At the current price of $251.03, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is MCD undervalued?
MCD trades at a P/FCF ratio of 22.9x with a free cash flow yield of 4.37%. This P/FCF is in a moderate range. However, whether MCD is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value MCD stock using DCF?
To perform a DCF valuation on McDonald's Corporation: (1) Start with the trailing free cash flow per share ($10.94) as the base, (2) project future FCF growth over 5-10 years based on Restaurants industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting MCD's risk profile — with a debt-to-equity of -53.36x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to MCD?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For McDonald's Corporation, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Restaurants trends, then discounting those amounts to today's dollars. MCD's ROIC of 17.8% reflects how efficiently the company converts invested capital into profit.
How does WACC affect MCD stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For MCD, with a debt-to-equity ratio of -53.36x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 15.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See MCD PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Cyclical valuationsDCF and P/E value MCD with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-28. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.