We’re going to be talking about the stock of arguably the most well-known food chain in the world, McDonald’s, the one thing that sticks in my mind when I think about McDonald’s is that creepy clown. They used to have those roaming McDonald’s.
To be honest, I’m not surprised that McDonald’s decided to find out Ronald McDonald’s and they thought that Clark would scare any kid away from buying the cheeseburger. The company was founded as a barbecue restaurant in California, United States, in 1940 by brothers Richard and Maurice McDonald. Eight years later, it was transformed to selling hamburgers as we know it today. Since then, McDonald’s has grown like wildfire with over thirty six thousand restaurants, as reported in 2017. Now, the interesting thing about McDonald’s is that only 15 percent of the restaurants are owned and operated by the McDonald’s corporation directly in these restaurants. They generate the revenue through the, so to speak, normal way by making produce and selling for markup. But the other 85 percent of these stores are franchises in which franchise owners pay high amounts of dollars to run a McDonald’s franchise. But how much revenue McDonald’s actually bringing in? As I’ve mentioned before, I’m a big fan of companies that generate healthy amounts of revenue, and that’s a good sign that the product is sought after. McDonald’s brings in the most revenue out of any fast food chain in the world by far, with the 2016 annual report stating that a bowl and over twenty four billion dollars worth of sales not too shabby. But if you look at the revenue over the past couple of years, you can see that it has been decreasing, which I got to say I’m not that impressed.
But obviously at this point, it’s a blank canvas to say that the stock is by no means a growth stock. If we look at the business like cycle, I’d say it been the maturity decline stage. As you probably noticed, McDonald’s has employed a bunch of strategies to reverse the stock, so to speak, or to at least pick the company at current levels. But just because it’s not a growth stock does not mean we shouldn’t be investing in a lot of the time. Maturi stocks are overlooked and therefore undervalued, which can mean a good stock that we must do some research on some significant measures. Gross revenue is important, but what percentage of that revenue is going to actually keep people that are still spending on expenses? Yep, not a whole lot. Not the best of ratios, but still better than to bring in a good revenue. But generating negative profits, earnings or profits per share of McDonald’s work out to be six point ninety one dollars. But does this does not mean absolutely anything until we compare it to how much we have painful to stop. You could be generating one hundred dollars per share, the paint a million dollars and that doesn’t take a genius to work out their turn. And then the middle ACMD is currently one hundred and seventy two dollars. This gives us the P e ratio of twenty four point nine one. Now we divide this by the earnings. We get four percent return. Dividing the earnings by the price can be a good rule of thumb for what we might expect to get return wise on the stock. Four percent is not the greatest return. Even in today’s saturated market. McDonald’s is a stable and an understandable business, which I might Warren Buffet would be happy with. But it’s just generating too low profits, competitor’s price, which is why I will not be throwing my money at the stock.
For those older investors who are looking for a the stock to put your money in, perhaps you might consider buying McDonald’s. As for dividend this four point four dollars, given your return of a dividend return of two point thirty three per cent. But even then, there are bitter dividend stocks, I believe remember Enron and these videos? I am providing information on the stock, but also my opinions on different stock. Make sure to do your own research and buy stocks and with your investing style.