McDonalds has roughly 4.71
B in cash with 9.14
B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 3.86.
Macroaxis provides trade recommendations on McDonalds to complement and cross-verify current
analyst consensus on McDonalds. Our advice engine determines the firm's potential to grow exclusively from the perspective of an investor's current risk tolerance and investing horizon.
Investing in McDonalds, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding McDonalds along with other instruments in the same portfolio. Using conventional
technical analysis and
fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of McDonalds' price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as McDonalds. Your research has to be compared to or analyzed against McDonalds' peers to derive any actionable benefits. When done correctly, McDonalds' competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in McDonalds.
How important is McDonalds's Liquidity
McDonalds
financial leverage refers to using borrowed capital as a funding source to finance McDonalds ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. McDonalds financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to McDonalds' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of McDonalds' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between McDonalds's total debt and its cash.
McDonalds Gross Profit
McDonalds Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing McDonalds previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show McDonalds Gross Profit growth over the last 10 years. Please check McDonalds'
gross profit and other
fundamental indicators for more details.
McDonalds Correlation with Peers
Investors in McDonalds can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in McDonalds. Diversification will allow for the same portfolio return with reduced risk. The correlation table of McDonalds and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities McDonalds is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with
your current brokerage. Please check
volatility of McDonalds for more details
Is McDonalds valued correctly by the market?
We consider McDonalds very steady.
McDonalds has Sharpe Ratio of 0.1, which conveys that the firm had 0.1% of return per unit of risk over the last 3 months. Our approach to estimating the volatility of a stock is to use all available market data together with stock-specific
technical indicators that cannot be
diversified away. We have found twenty-eight
technical indicators for McDonalds, which you can use to evaluate the future volatility of the firm. Please verify McDonalds
mean deviation of 0.9466, and Risk Adjusted Performance of 0.1481 to check out if the risk estimate we provide is consistent with the expected return of 0.13%.
McDonalds technical analysis indicates possible correction
The treynor ratio is down to 0.21 as of today. McDonalds has relatively low volatility with skewness of 0.56 and kurtosis of 1.32. However, we advise all investors to independently investigate McDonalds to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure McDonalds' stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact McDonalds' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.
Our Conclusion on McDonalds
Although some other firms within the restaurants industry are still a little expensive, even after the recent corrections, McDonalds may offer a potential longer-term growth to shareholders. To conclude, as of the 3rd of December 2022, our analysis shows that McDonalds slowly supersedes the market. The firm is
fairly valued and projects
low probability of bankruptcy for the next 2 years. Our ongoing 90 days buy-sell recommendation on the firm is
Strong Buy.
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Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of McDonalds. Please refer to our
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