If you've ever faced the frustration of finding the ice cream machine out of order at McDonald's (NYSE: MCD), you'll understand the headache investors holding the company's stock faced in 2024. Disappointing growth and weak earnings have kept shares in a tight trading range, down about 1% over the past year, while sharply underperforming the broader market.
Has this restaurant giant known for its iconic Golden Arches lost some of its luster, or are there reasons for investors in 2025 to start lovin' McDonald's again?
Let's discuss what to do with the stock now.
With more than 40,000 restaurant locations in over 100 countries, McDonald's is one of the most recognizable consumer brands worldwide. The fast-food pioneer has found success by not only building a reputation for serving quality meals at an affordable price, but also delivering spectacular shareholder returns over its storied history. Indeed, the stock is up 293% in the past 10 years.
That being said, the recent share price weakness reflects some underwhelming financial trends, at least in comparison to a stronger 2023. With results through the first nine months of 2024 for the period ended Sept. 30, total revenue was up just 2% year over year, as adjusted earnings per share (EPS) declined by -1%. Some ongoing cost pressures have impacted operating margins while the muted top line reflects a drop in international market comparable sales, outweighing a 0.3% growth in the U.S. during the last quarter.
Favorably, there is an expectation for an improvement in these headline numbers based on McDonald's "Accelerating the Arches" strategy. The effort focuses on refreshed marketing to boost brand appeal and customer engagement while maintaining the quality of core menu items.
Additionally, the plan doubles down on McDonald's "4Ds" of success, all aimed at propelling sustainable growth: digital capabilities, drive-thru operations, delivery options, and development of new markets.
According to Wall Street consensus, 2025 is poised to mark a growth rebound for McDonald's, with projections showing a 3.8% increase in revenue as adjusted EPS strengthens by 6.8% to reach $12.61.