10/27/2012

McDonald's (NYSE:MCD): Dividend Idea Of The Week - A Restaurant Leader With 3.55% Yield And 7.64% Upside Potential

Weekly Dividend Stock Ideas Researched by The Dividend Yield Weekly. Our weekly Dividend Idea is the leading restaurant operator and franchises company McDonald's (NYSE:MCD). McDonald's owns and franchises its restaurants all over the world. By the end of 2011, the company had 33,510 restaurants in 119 countries, of which 27,075 were operated by franchisees and 6,435 were operated by the company. McDonald’s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Snack Wraps, French fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages. More on Reuters here

MCD operates a proven business model with a well diversifed global structure. The company is a strong established Dividend Champion and raised dividends over a period of 36 consecutive years with a double-digit long-term growth rate. Morningstar estimates the fair value of the company at $94.0, an upside potential of 7.64% compared to the previous close price of $87.33.


We like the strong brand and consumer focus of McDonald's. The huge cash flow of $7.1 billion allows the company to pay $2.6 billion dividends and to repurchase $3.0 billion own shares as of fiscal year 2011. Roughly $2.7 billion were used for CAPEX. 



Here is a short biography of the stock:

McDonald's (NYSE:MCD) has a market capitalization of $87.44 billion. The company employs 420,000 people, generates revenue of $27,006.00 million and has a net income of $5,503.10 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $9,766.70 million. The EBITDA margin is 36.16 percent (operating margin 31.58 percent and net profit margin 20.38 percent).

Financial Analysis: The total debt represents 37.89 percent of the company’s assets and the total debt in relation to the equity amounts to 86.87 percent. Due to the financial situation, a return on equity of 37.92 percent was realized. Twelve trailing months earnings per share reached a value of $5.31. Last fiscal year, the company paid $2.53 in form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.33, P/S ratio 3.26 and P/B ratio 6.20. Dividend Yield: 3.53 percent. The beta ratio is 0.41.

Long-Term Stock History Chart Of McDonald's (Click to enlarge)
Long-Term Dividends History of McDonald's (MCD) (Click to enlarge)
Long-Term Dividend Yield History of McDonald's (NYSE: MCD) (Click to enlarge)

These are the main competitors:


Darden Restaurants (DRI) has a market capitalization of $6.76 billion. The company generates revenue of $7,998.70 million and has a net income of $476.50 million. The firm’s EBITDA amounts to $1,088.00 million. The EBITDA margin is 13.60% (operating margin 7.98% and net profit margin 5.96%).

The total debt represents 35.68% of the company’s assets and the total debt in relation to the equity amounts to 115.13%. Last fiscal year, a return on equity of 25.22% was realized. Twelve trailing months earnings per share reached a value of $3.66. Last fiscal year, the company paid $1.72 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is 14.36, Price/Sales 0.85 and Price/Book ratio 3.69. Dividend Yield: 3.80%. The beta ratio is 0.86.

Dunkin Brands (DNKN) has a market capitalization of $3.73 billion. The company generates revenue of $628.20 million and has a net income of $34.44 million. The firm’s EBITDA amounts to $207.33 million. The EBITDA margin is 33.00% (operating margin 27.23% and net profit margin 5.48%).

The total debt represents 45.70% of the company’s assets and the total debt in relation to the equity amounts to 197.53%. Last fiscal year, a return on equity of 6.55% was realized. Twelve trailing months earnings per share reached a value of $0.72. Last fiscal year, the company paid $0.00 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is 43.04, Price/Sales 5.27 and Price/Book ratio 5.05. Dividend Yield: 1.91%. The beta ratio is not calculable.



Yum! Brands (YUM) has a market capitalization of $31.58 billion. The company generates revenue of $12,626.00 million and has a net income of $1,335.00 million. The firm’s EBITDA amounts to $2,392.00 million. The EBITDA margin is 18.95% (operating margin 14.38% and net profit margin 10.57%).

The total debt represents 37.55% of the company’s assets and the total debt in relation to the equity amounts to 181.95%. Last fiscal year, a return on equity of 77.61% was realized. Twelve trailing months earnings per share reached a value of $3.40. Last fiscal year, the company paid $1.07 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is 20.58, Price/Sales 2.51 and Price/Book ratio 17.71. Dividend Yield: 1.91%. The beta ratio is 0.88.

Tim Hortons (THI) has a market capitalization of $7.70 billion. The company generates revenue of $2,867.88 million and has a net income of $387.76 million. The firm’s EBITDA amounts to $674.50 million. The EBITDA margin is 23.52% (operating margin 19.96% and net profit margin 13.52%).

The total debt represents 23.44% of the company’s assets and the total debt in relation to the equity amounts to 44.83%. Last fiscal year, a return on equity of 29.57% was realized. Twelve trailing months earnings per share reached a value of $2.56. Last fiscal year, the company paid $0.68 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is 19.40, Price/Sales 2.69 and Price/Book ratio 6.78. Dividend Yield: 1.71%. The beta ratio is 0.71.

Starbucks (SBUX) has a market capitalization of $34.86 billion. The company generates revenue of $11,700.40 million and has a net income of $1,248.00 million. The firm’s EBITDA amounts to $2,078.10 million. The EBITDA margin is 17.76% (operating margin 14.77% and net profit margin 10.67%).

The total debt represents 7.47% of the company’s assets and the total debt in relation to the equity amounts to 12.53%. Last fiscal year, a return on equity of 30.91% was realized. Twelve trailing months earnings per share reached a value of $1.79. Last fiscal year, the company paid $0.56 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is 25.58, Price/Sales 3.00 and Price/Book ratio 7.86. Dividend Yield: 1.47%. The beta ratio is 1.23.

Burger King World (BKW) has a market capitalization of $5.23 billion. The company generates revenue of $2,075.80 million and has a net income of $84.60 million. The firm’s EBITDA amounts to $335.60 million. The EBITDA margin is 16.17% (operating margin 16.17% and net profit margin 4.08%).

Here is the full Dividend Idea (McDonald's) as PDF-report: 






Do you like this report? Subscribe here.

------

* I am long in MCD shares. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: Long DRI. I have no positions in any other stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

The stock analysis, including the rating and up/down potential, is based on historical information and provided by several data provider like Thompson Reuters, Morningstar, GoogleFinance, YahooFinance and MSN. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Material presented here is for informational purposes only. Before buying or selling a security, you should do your own research and reach your own conclusion.

1 comment:

  1. Anonymous11/08/2012

    McDonald's Corporation (MCD) shares have been in a downtrend ever since the company reported yet another disappointing quarter. The company recently announced the worst same-store sales growth in many years and blamed competition and a weak economy for the financial results.

    ReplyDelete

Do you have any questions or notes to this article?
Please let me know your thoughts and we will discuss it.

If you feel that my work has helped you and you'd like to support my mission to spread investment ideas like honesty, openness, unconditional love, and courage, please make a donation below. I'm very grateful for your support.

Being supported by my readers enables me to give my creative output (articles, pdf free downloads) to the public domain, so it isn't copyrighted. Please share it freely so that others may benefit from it.

Thanks so much for your support. I really appreciate it.

To donate via PayPal, credit card, or e-check, please click the button below:

If you like to receive the Dividend Weekly for free (weekly published E-Book with around 1,000 best dividend paying stocks), please enter your email and verify your adress. Easily unsubscribe at any time.