Buffett Brain · Research note
Score updated 26 Sept 2026
MCD· Consumer Discretionary
McDonald's
McDonald's strong moat is evident with a 46.1% operating margin, but valuation concerns persist with a P/E of 22.3.
Buffett fit
Partial fit
Owner
74
Durability
87
Management
79
Price
38
Score updated 26 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Discretionary stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning McDonald's would mean benefiting from its strong brand and franchise model, with 57.4% and 19.1% , both top-quintile in its sector.
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McDonald's durability is supported by its consistent profitability over the last five years and an EPS CAGR of 12.78%.
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Management has effectively returned capital to shareholders, with a 6.89% dividend CAGR and a share count CAGR of -1.13% over five years.
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The current of 22.3 and yield of 3.77% suggest a stretched valuation.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
8- 146.1% , indicating strong cost control and brand power.
- 2 of 19.06% is top-quintile in the sector, reflecting efficient capital use.
- 357.4% exceeds the sector's top-quintile cutoff of 53.9%.
- 4EPS CAGR of 12.78% over five years, showing robust earnings growth.
Concerns
8- 1 of 22.3 suggests high growth expectations, limiting .
- 2 yield of 3.77% is below the desired 8-10% range.
- 3Net debt/EBITDA of 3.68 indicates significant risk.
- 4Current ratio of 0.95 suggests potential liquidity constraints.
Price history
$247+3.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
McDonald's operates and franchises restaurants globally, generating revenue from franchise fees, royalties, and sales at company-operated restaurants. With $26.89B in TTM revenue and a 31.9% net margin, it's highly profitable. Franchisees provide a capital-light growth model, allowing McDonald's to focus on brand and operational efficiency. The unit economics benefit from scale, with high margins sustained by strong brand power.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 21, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Consumer Discretionary
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