- There are few companies in the world more recognizable than McDonald's, and we're huge fans of its mostly franchisee business model.
- The scale of McDonald's supply chain is also practically unmatched, having been augmented and refined over decades. This gives it a leg up on cost containment.
- We don't think McDonald's is any riskier than the average S&P 500 company, and therefore we assign a ValueRisk rating of medium.
- McDonald’s aims to generate a free cash flow conversion rate north of 90% in the near term, aided by the asset-light nature of its business model. We love its free cash flow profile.
- At the moment, we value shares of McDonald's at $218 each, or just slightly below where shares are trading at ($234 per share). Shares yield an attractive ~2.4%.
For further details see:
McDonald's: Mostly Franchisee Business Model Is Perfect For This Inflationary Environment