MCD - McDonald's Serves Up Sizzling Growth In 2023 And Tasty Valuation Given Growth Prospects

2024-02-07 08:17:06 ET

Summary

• McDonald's has shown strong financial performance in Q4 and full year 2023, with growth in total sales and expanding operating margins.
• I see this success as a result of their strategy of enhancing the customer experience, increasing operational efficiency, and innovating its menu offerings.
• Despite potential challenges in 2024, McDonald's is expected to continue growing revenues at around 12% YoY and has opportunities to expand into new business segments.
• The firm still faces some risk from wage inflation and significant exposure to international markets, increasing the potential for operational and earnings disruptions.
• Buy rating reiterated.

Investment Thesis

McDonald's Corporation (MCD) continues be a highly profitable business with both great topline and bottom-line growth characterizing their FY23.

Despite a difficult macroeconomic backdrop, McDonald's managed to grow sales and margins thanks to efficient cost control and a great understanding of what customers want from the menu.

When combined with a reasonable 8% undervaluation given a base-case scenario, I believe the firm's stock still makes for a compelling long-term buy and hold GARP opportunity....

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