麦当劳凭借其特许经营模式和可持续股息具备结构性长期优势，但目前受短期宏观经济逆风和利率上升压力拖累。

Now, we come to McDonald's stock, who in the last year is down by over 10%, and in the last 5 years only up by 17% after we've seen the pullback in the last year. So, returns have certainly not been attractive, and of course, that's the reason that it's at a 52-week low. But what's interesting about trading at these prices is the starting yield for McDonald's is now the highest that it's been really in close to the last 10 years with the exception of the 2020 market crash.

So, if we jump over to our dividend breakdown sheet, let's go ahead and zoom back out a little bit, and what we can see is when we look at McDonald's, is unlike Pepsi, which we just looked at, is the capital allocation situation is much more sustainable. The yield is about 2.7% historically growing dividends at about 7%, which is pretty attractive overall, and fortunately, they're not using all of their capital to pay out dividends, which was the case for Pepsi. In fact, the free cash flow payout ratio has been relatively stable, close to that 70 to 75% range over the last decade. So, it does seem to be a trend, that's the range that management seems to be targeting.

Now, one of the things you will also notice as we look closely at McDonald's is when we look at 10-year returns before the recent dip, they were actually relatively strong. And what's interesting is they actually executed very well on some changes they made internally with the company. What do I mean by this? Well, to start, take a look at the profitability sheet when we look at McDonald's. What you'll notice when we look at McDonald's is revenue has actually gone nowhere over the last decade, sitting at 25 billion in 2015, and then in 2025, 26.8. So, revenue growth has essentially been stagnant. However, that's not true for earnings growth. Now, there's really only one way this could be the case. Of course, it's if margins have expanded considerably, and that's been exactly what happened.

So, how did they pull off such a shift within the company? How did margins expand by such a drastic amount? Well, this was certainly intentional. There's no doubt about that. McDonald's' business model has shifted dramatically in the last decade. Their biggest long-term strength now is their franchise model. They shifted from a more company-owned, company-operated restaurant model into where roughly 95% of the restaurants are franchised. And what this does is it creates an incredibly capital-light business model. Let me show you an example. Look at the developmental licenses, which is around 20% of their restaurants. Essentially, they don't provide any upfront investment. The franchisee has to fund the real estate, building, and the equipment, and all McDonald's does is collect the royalties. So, that's obviously going to be exceptional margins anytime that's the case. Even with their conventional licenses, they're not providing the upfront investment for the equipment. They just provide the building and real estate, which, keep in mind, means they get to partake in the appreciation of that real estate as well. So, it's a very strategic investment. And in that case, they also get to collect rent. And so, the ultimate result of this shift in strategy was margins expanding considerably, allowing them to grow earnings dramatically even while revenue on the surface level looked like it stagnated.

Now, this gives McDonald's some serious advantages, at least relative to most of their peers, because when you talk about a stock like McDonald's, again, let's use Pepsi as an example since we just looked at them. On the surface level, you think there might be a lot of similarities, but that's simply not the case. McDonald's is much more recession-proof due to the new business model that they've implemented.

Now, it's by no means a perfect stock. It's still not recession-proof. Just relative to their peers, they do have some serious advantages. And analysts do seem to agree with this.

For example, if we jump over to our sensitivity model and look at McDonald's, you can see earnings growth is a little more attractive than their peers. The projected EPS CAGR through 2030 is sitting at about 6.35 and it's a little bit higher through 2028. So, if they get about 6.5% EPS growth.

Now, if the PE multiple just slightly reverts back to its historic average, despite the fact it's trading at a stark discount, you can see forward-looking returns are essentially in line with market averages. At least the price returns are, but keep in mind that's not including the nice 2.7% yield that you're also getting right now, which all of a sudden is going to push those forward-looking returns to above 10%.

Now, that being said, I do want to point out they are seeing some short-term issues really related to the macro economy as a whole. The consumer environment right now is a major headwind. McDonald's is facing higher food, labor, utility cost, and equipment costs from inflation as well. And they're also seeing much weaker restaurant sales growth.

That's pretty evident right here when you look at the year-over-year changes. Q2 2026 sales by company-operated restaurants was only 2.7% and revenues from franchise restaurants was about 4.3%. So, again, you could argue that's revenue growth close to in line with what we're seeing with inflation right now. So, certainly not optimal short-term performance on that front.

The last note we need to make is also interest rates all of a sudden are much more important for McDonald's. Why is that the Well, it's because their growth heavily depends on franchisees opening new stores. And when interest rates are higher, that's not optimal for McDonald's opening new stores.

And we can see right now the markets are expecting that we actually get another Fed hike, putting the target rate at about 375 to 400. So, McDonald's is structured in a way it definitely has advantages versus its peers and forward-looking returns if they achieve their earnings growth expectations are actually pretty decent, but there is still short-term weakness.