Mcdonald's
ldsMcDonald’s Corporation
April Hahnfeld Analyst
July 18, 2010
Recommendation:
HOLD
Porter’s 5 Forces:
• • • • • • • • • • • • • • Threat of Competition: High Threat of New Entrants: High Threat of Substitution: Low-Moderate Power of Suppliers: Low Power of Buyers: Low
Pros: Ticker Exchange Industry Sector Classification Market Cap. 52 Week Price range Recent Price Current P/E Projected 2012 P/E 2009 EPS Projected 2012 EPS Dividend Yield Debt Rating Beta MCD NYSE Retailing - Foods Consumer Services Income & Capital Appreciation $71,153 M $53.88 - $71.84 $69.22 (7/9/2010) 15.59 14.27 $3.98 $ 3.33% AA0.61
Best profit margin in the industry Moderate Leverage Good dividend yield and earnings growth Attractive per-share earnings growth due to large share repurchases Significant internal exposure and shareholder focus
Cons:
Commodity cost risks Extremely competitive industry High food, energy, and labor cost concerns Product failures
Brief Overview
McDonald’s Corporation’s principal activity is to franchise and operate McDonald’s restaurants in the food service industry. These restaurants serve a varied, yet limited, valuepriced menu in more than 100 countries worldwide. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchise arrangements, and foreign-affiliated markets and developmental licensees under license agreements. Independently-owned and operated distribution centers, approved by the Company, distribute products and supplies to most McDonald’s restaurants. In addition, restaurant personnel are trained in the storage, handling and preparation of products and in the delivery of customer service. In February 2009, the Group sold its interest in Redbox Automated Retail, LLC. 1
1
Thomson One
PORTFOLIO CONSIDERATIONS
The EIF currently has 3.64% of equity assets invested in McDonald’s. The stock falls within the Retailing-Food industry of the Consumer Discretionary
April Hahnfeld Analyst
July 18, 2010
Recommendation:
HOLD
Porter’s 5 Forces:
• • • • • • • • • • • • • • Threat of Competition: High Threat of New Entrants: High Threat of Substitution: Low-Moderate Power of Suppliers: Low Power of Buyers: Low
Pros: Ticker Exchange Industry Sector Classification Market Cap. 52 Week Price range Recent Price Current P/E Projected 2012 P/E 2009 EPS Projected 2012 EPS Dividend Yield Debt Rating Beta MCD NYSE Retailing - Foods Consumer Services Income & Capital Appreciation $71,153 M $53.88 - $71.84 $69.22 (7/9/2010) 15.59 14.27 $3.98 $ 3.33% AA0.61
Best profit margin in the industry Moderate Leverage Good dividend yield and earnings growth Attractive per-share earnings growth due to large share repurchases Significant internal exposure and shareholder focus
Cons:
Commodity cost risks Extremely competitive industry High food, energy, and labor cost concerns Product failures
Brief Overview
McDonald’s Corporation’s principal activity is to franchise and operate McDonald’s restaurants in the food service industry. These restaurants serve a varied, yet limited, valuepriced menu in more than 100 countries worldwide. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchise arrangements, and foreign-affiliated markets and developmental licensees under license agreements. Independently-owned and operated distribution centers, approved by the Company, distribute products and supplies to most McDonald’s restaurants. In addition, restaurant personnel are trained in the storage, handling and preparation of products and in the delivery of customer service. In February 2009, the Group sold its interest in Redbox Automated Retail, LLC. 1
1
Thomson One
PORTFOLIO CONSIDERATIONS
The EIF currently has 3.64% of equity assets invested in McDonald’s. The stock falls within the Retailing-Food industry of the Consumer Discretionary