McDonald’s: Wall Street goes for a “Happy Meal”

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  Wolfgang Hagl
  Redaktor

It’s one report after another on Wall Street this week. Four of the five largest companies in the S&P 500 Index are presenting quarterly reports. In view of the presentation of figures by Apple, Microsoft, Amazon.com and Meta Platforms, the results of well-known consumer stocks are fading into the background. Yet these companies have recently stolen the show from the technology giants. This also and especially applies to McDonald’s. In the first four months of the year, the fast food chain’s capitalization increased by 8.5%. By contrast, Apple & Co. were on the losing side. The outperformance of McDonald’s reflects a change in favorites. US President Donald Trump’s tirades on trade policy have caused a great deal of uncertainty and doubt about the economic outlook. He has thus strengthened investor interest in crisis-proof value stocks.

Round anniversary

McDonald’s certainly has defensive qualities. In April 1955, company founder Roy Kroc opened the first fast food restaurant in Des Plaines in the US state of Illinois. 70 years later, the yellow “M” shines in front of almost 43,500 restaurants in more than 100 countries – 95% of which are franchised. Despite the global presence, the domestic market plays a central role. In 2024, McDonald’s generated 41% of its total sales in the USA. However, Americans’ appetite for burgers and fries has waned. In the 4th quarter of 2024, sales in the US business shrank by 1.4% – the sharpest decline since the pandemic year 2020. Globally, sales increased by 0.4% on a comparable basis. Analysts had also expected dwindling sales in international business. Here, the Group benefited from an increased influx of customers in the Middle East and Japan.

In the USA, management is trying to keep fast food fans happy with a low-cost menu. The “$5 Meal Deal” introduced last June has been extended. According to CEO Chris Kempczinski, the campaign is working: In the final quarter of 2024, customers who bought the menu in the USA spent more than USD 10 per transaction. Tomorrow will show how business in the USA and beyond has fared in the first three months of 2025. McDonald’s publishes its quarterly results at 2:30 pm our time. Wall Street is assuming that consumers have been reluctant to visit restaurants due to the uncertain economic outlook. On average, analysts expect sales to fall in the first quarter.

Unchecked hunger for growth

During the conference call with management, Wall Street is also likely to ask about the potential impact of US trade policy on business and supply chains. China plays an important role. The company is expanding particularly rapidly in the Middle Kingdom. McDonald’s plans to open 1,000 new branches in China by 2025. Across the Group, the network is set to expand by a net 1,800 outlets. The goal is clear: by the end of 2027, those responsible want to reach the sound barrier of 50,000 McDonald’s restaurants worldwide. Profitability is already set to increase slightly this year. The CEO expects an adjusted operating margin in the mid to high 40% range for 2025. In any case, the key figure should exceed the 46.3% recorded last year.

Investment solution

A more concrete or even higher forecast could give McDonald’s shares just as much of a boost as a positive set of figures. If CEO Kempczinski delivers the “Happy Meal” to Wall Street, an upward breakout is possible. The Dow Jones member is currently facing horizontal resistance in the USD 315/320 range. With the Long Mini-Future (ISIN: CH1353322469), traders can bet on the positive scenario. The product traded by UBS on Swiss DOTS participates in rising McDonald’s prices with a current leverage of 5.4.

Caution: If the burger joint disappoints and the share price falls, disproportionately high losses are to be expected.