McDonald’s Share Price Forecast March 2022 – Time to Buy MCD?
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Shares of American multinational fast food corporation McDonald’s (NYSE: MCD) are in the red today, after closing at $222 as of March 10th (19:59 EST). McDonald’s shares have taken a big hit this year, as they are down by 17% year to date. The shares haven’t been spared from the market’s overall bearish move lower, which has caused most of the pullback in the last 30 days.
McDonald’s – Technical Analysis
The financial statement released by McDonald’s indicates its market cap at $165.076 billion with total assets worth $53.854 billion. Revenue for 2021 was at $23.22 billion with a profit margin of 32.49% compared to $19.21 billion in 2020.
Moving averages such as Exponential Moving Average (10)(231.92), Simple Moving Average (10)(233.87), Exponential Moving Average (20)(239.58), Simple Moving Average (20)(242.91) and Exponential Moving Average (30)(243.98) are indicating a sell action. Oscillators such as Bull Bear Power (−29.74) and Ultimate Oscillator (7, 14, 28)(31.74) are neutral.
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Recent Developments
Mcdonald’s was founded as a standalone restaurant by Siblings Richard and Maurice McDonald in 1940. It has now become the world’s largest restaurant chain in terms of revenue, currently operating in 100 countries and serving 69 million customers daily. Its main revenue sources include rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. The company has increased its dividend for the past 45 consecutive years, with the most recent dividend increase occurring last year when it boosted the payout by 7%.
After the successful testing of Beyond Meat plant-based meat substitutes, McDonald’s introduced McPlant, a plant-based burger. It has also announced plans to develop additional meat alternative menu items that extend to chicken substitutes and breakfast sandwiches. The company made several celebrity endorsements, such as partnering with Korean boy group BTS to release the “BTS Meal” in 50 countries around the world.
The company and its franchise have become more efficient, with its global comparable sales increasing 17% over last year and 8% over 2019. Its loyalty program, known as MyMcDonald’s has grown to 30 million enrolled members and 21 million active members earning rewards, since the program launched in the U.S.
The compelling valuation for the shares can be justified with several metrics. The company’s price-to-earnings ratio of 22 has decreased from levels above 30 in late 2020 and early 2021. Investors who buy McDonald’s shares today will get paid a hefty payout. However, the company’s valuation multiples could come down even more before shares begin gaining some meaningful recovery momentum.
Should You Buy MCD Shares?
Many would think that McDonald’s is facing some serious problems by looking at its share price decline. However, that is not the case. Its Q4 revenue increased 13% year over year, helped by a 12.3% increase in global comparable sales. In the U.S. market, sales increased by 7.5% year over year or 13.4% over a two-year period.
McDonald’s has been doing particularly well in the digital sphere where sales have increased 25% year over year to $18 billion in 2021, which represents a 60% increase over 2020. Various analysts are positive about the company’s future, expecting earnings per share to grow at a compound rate of about 13% over the next five years.
All of this points towards McDonald’s shares being attractive to investors. While the shares aren’t exactly a bargain at this point, they can reap meaningful returns over the long term.
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