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Hamburger vertigo - MCD with a new share price record

Hamburger vertigo - MCD with a new share price record

created Daniel KosteckiApril 13 2023

Share price McDonald's companies reached an all-time high this week. One share of the company with golden arches in the logo had to pay USD 285. This means that the share price has increased by more than 8% since the beginning of the year, and by more than 6% in the last 21 months. As a result, the company's capitalization exceeded USD 200 billion and now reaches USD 208 billion. In this respect, MCD is the 47th company in the world.

Why are McDonald's shares going up?

What could drive the hamburger giant's share price soaring? As analysts believe UBS global sales dynamics, competitive advantage and strategic initiatives can support the company's listing. Factors such as confidence in continued above-average sales in US locations, as well as around the world, could be positive for the company. Analysts said they model Q2,34 EPS at $2023 and expect profitability to improve by XNUMX.

READ: How to invest in fast food chains? [Guide]

The progress in profits and sales also seems to be visible in the company's valuations. The price to earnings ratio has increased to almost 34, which is the highest since 2008. The forward P/E is 27, which may indicate high expectations for an improvement in MCD's results. The price-to-sales ratio also increased to 9, the highest value in at least two decades.

Personnel changes and more

MCD is also planning personnel changes to reduce the company's costs. The fast-food chain has offered some employees the chance to stay with the company with cuts to their pay packages, including changes to titles and benefits such as bonuses and capital grants. McDonald's job cuts and changes affect employees in the US and abroad, at the company's Chicago headquarters and its field offices, as well as in various departments, including marketing and operations.

It can also be noted that the company seems to be defensive, which also went through the crisis of 2007-2008. Then the share price fell from over USD 60 to USD 50, and is now trading closer to USD 300. The company will announce its results for the first quarter on April 25.

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About the Author
Daniel Kostecki
Chief Analyst of CMC Markets Polska. Privately on the capital market since 2007, and on the Forex market since 2010.

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