McDonald's Corporation (MCD) Intrinsic Value & DCF Valuation
Restaurants · NYSE
Current Price
$270.95
Intrinsic Value
$285.66
+5.1% margin of safety
What Is McDonald's Corporation's Intrinsic Value?
As of 2026-08-21, the base-case DCF model estimates the intrinsic value of McDonald's Corporation (MCD) at $285.66 per share, compared with a market price of $270.95, a margin of safety of +5.1%. The base case assumes 7.0% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $235.85 to $342.58. 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 $270.95, MCD trades about 5.1% 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
McDonald's possesses unparalleled global brand recognition, fostering immediate customer trust and preference. This allows for consistent demand across diverse markets.
↑Supply Chain Efficiency
Its massive scale enables highly efficient and cost-effective supply chain operations. This provides a significant cost advantage over smaller competitors.
↑Real Estate Portfolio
McDonald's owns or leases prime real estate locations globally. This strategic asset base creates high barriers to entry for new entrants.
INVESTMENT RISKS
↓Labor Cost and Availability
Rising labor costs and difficulties in attracting and retaining staff can impact profitability and service quality. This is a persistent operational challenge.
↓Regulatory and Health Scrutiny
Increased government regulations on food sourcing, nutrition, and labor practices pose ongoing compliance risks. Public health concerns can also lead to negative sentiment.
↓Geopolitical and Economic Volatility
Global operations expose McDonald's to currency fluctuations, political instability, and economic downturns in various regions. These factors can disrupt sales and operations.
Base case
MCD base case valuation
Intrinsic Value
$285.66
Margin of safety
+5.1%
Expected annual return
+1.1%
Base case assumptions: 7.0% annual growth, 10.0% discount rate, 24.8x exit multiple, 5 year projection. Data as of 2026-08-21.
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)
$38.98
FCF/Share (TTM)
$10.92
ROIC (TTM)
17.7%
ROE (TTM)
-561.2%
P/FCF
24.8x
EV/EBITDA
17.0x
FCF Yield
4.03%
Debt/Equity
n/m
Based on trailing twelve-month data, MCD shows a free cash flow per share of $10.92 and a ROIC of 17.7%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 24.8x and FCF yield of 4.03% 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 $10.92 in free cash flow per share. At the current price of $270.95, 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 24.8x with a free cash flow yield of 4.03%. 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 ($10.92) 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 17.7% 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 17.0x, 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 2026-08-21. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.