Is The Market Underpricing McDonald’s Stock

McDonald's (MCD) shares lost 18.5% over the past year, including dividends, while the S&P 500 returned 17.4%. Buyers today pay 19.6 times McDonald's earnings over the past twelve months. That multiple sits below the 24.7 average seen at its fiscal quarter ends over the past three years, and marks a lower P/E than at any fiscal quarter end in the past ten years. So how much of that markdown could three more years of McDonald's own growth, and a P/E that moves part of the way back toward its average, earn back?

What Could McDonald's Stock Be Worth In Three Years?

Based on the assumptions set out below, McDonald's shares would be worth about $338.49 three years from now, 39.5% above today's price. A company's value equals its earnings multiplied by the P/E investors pay, so McDonald's value rises when it sells more, keeps more of each sales dollar as profit, or commands a higher P/E.

Here is McDonald's today against the scenario three years out:

Selling more generates most of the gain, accounting for about 68% of the projected increase. Almost none of the upside comes from the net margin, which stays close to today's level. A higher P/E provides about 30%, because Trefis assumes the multiple moves 40% of the way back toward its three-year average. Only that last part represents a bet that the market pays too little today; McDonald's earning more accounts for the rest. So the market may be underpricing the stock somewhat, but most of the upside rests on growth.

When McDonald's is a large share of what you own, your plan depends on the business delivering more. See how to protect a concentrated position.

McDonald's Growth Comes From New Restaurants And Abroad

In this scenario, Trefis models McDonald's revenue growing by 7.9% a year, 1.25 times the 6.3% growth the company posted over the twelve months to fiscal Q2 2026. That rate exceeds the pace of any of the past three such twelve-month periods. Much of that growth has originated outside the U.S. During fiscal 2025, revenue from International Operated Markets, McDonald's largest segment, increased 8.0%, compared with 1.8% in the U.S.

New restaurants add to the sales. Management said McDonald's is on track to open about 2,600 gross restaurants by the end of 2026. A pressured consumer and rising development costs, however, have pushed its goal of 50,000 restaurants worldwide back to 2028.

U.S. sales have slowed. Domestic comparable sales grew 0.8% in fiscal Q2 2026, falling short of management's expectations, and were slightly negative in July. Management blamed weak execution of its value offers for most of the shortfall in customer visits. When reporting those fiscal Q2 2026 results in August, management said it expected comparable sales growth in its two international segments to speed up in fiscal Q3 2026. The company provided no revenue forecast for fiscal 2026 with those results.

How Does McDonald's Upside Change In Different Scenarios?

The table below shows the upside when one assumption changes and the other two stay as in the scenario:

For three years of owning the stock to return nothing, not counting dividends, revenue would have to shrink 3.5% a year. That compares with the 6.3% growth McDonald's delivered in the latest twelve months. With the other assumptions unchanged, the net margin would have to fall to 22.9% from 31.7% today. The P/E would have to drop to 15.5 from 19.6 today.

McDonald's revenue growth, and U.S. comparable sales within it, are the measures to watch when the company reports fiscal Q3 2026 results. Those results are expected on or around November 4, 2026.

Is Too Much Of Your Wealth Riding On One Stock?

Any gain in McDonald's from here depends on the business delivering more. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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