Financial Analysis: McDonald's

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Financial Analysis: McDonald's

  1. 1. Investment Analysis Team 9
  2. 2. OUTLINE • Company Information • Market Data Review • Financial Analysis • Investment Recommendation
  3. 3. COMPANY INFORMATION
  4. 4. COMPANY INFORMATION -Leading global foodservice retailer -34,000 local restaurants -Serving approximately 69 million people in 118 countries each day.
  5. 5. MARKET DATA REVIEW
  6. 6. 5 YEAR HISTORICAL STOCK PRICE image source: bloomberg.com
  7. 7. MARKET DATA P/E RATIO 17.56 MARKET CAP 97.21B EARNINGSPER-SHARE 5.54
  8. 8. FINANCIAL ANALYSIS
  9. 9. FINANCIAL ANALYSIS • Historical Growth Rates • Competitive Analysis • Profitability, Efficiency, Liquidity, Solvency, Performance and Coverage
  10. 10. HISTORICAL GROWTH RATES FY 2012 FY 2011 FY 2010 Revenue 1.7% 12.7% 5% Operating Income 1% 14% 9% Net Income 0.7% 11% 9%
  11. 11. HISTORICAL GROWTH RATES Net Income Revenue Operating Income
  12. 12. HISTORICAL GROWTH RATES 5 YEAR DIVIDEND PAYOUT GROWTH OF 15.5%
  13. 13. COMPETITIVE ANALYSIS
  14. 14. COMPETITIVE ANALYSIS • Profitability • Solvency • Efficiency • Coverage • Liquidity • Performance
  15. 15. PROFITABILITY Assumed figures are as of FY 2012 Mcdonald’s Burger King Yum! 31.2% 26.7% 16.8% 19.8% 5.9% 11.7% ROA 55.5% 9.4% 108.5% ROE 36.8% 10.0% 70% Operating Profit Margin Net Profit Margin
  16. 16. PROFITABILITY Operating Profit Margin Net Profit Margin
  17. 17. PROFITABILITY ROA ROE
  18. 18. EFFICIENCY Assumed figures are as of FY 2012 Mcdonald’s Burger King Yum! Fixed Assets Turnover 116% 205.7% 328% Equity Turnover 185.7% 176.8% 654% Total Asset Turnover 80.6% 35.2% 644.5%
  19. 19. EFFICIENCY Fixed Assets Turnover Total Asset Turnover Equity Turnover
  20. 20. LIQUIDITY Assumed figures are as of FY 2012 Mcdonald’s Burger King Yum! Current Ratio 1.45x 2.2x 0.87x Quick Ratio 1.09x 1.8x 0.49x Cash Ratio 0.69x 1.3x 0.35x
  21. 21. LIQUIDITY Current Ratio Quick Ratio Cash Ratio
  22. 22. SOLVENCY Assumed figures are as of FY 2012 Mcdonald’s Burger King Yum! Debt-toAsset Ratio 0.58x 0.78x 0.74x Debt-toEquity Ratio 1.31x 3.73x 2.97x Financial Leverage Ratio 2.31x 4.73x 3.99x
  23. 23. SOLVENCY Debt-to-Asset Ratio Financial Leverage Ratio Debt-to-Equity Ratio
  24. 24. PERFORMANCE Assumed figures are as of FY 2012 Mcdonald’s Burger King Yum! Cash Flowto-Revenue 25.3% 11.4% 16.8% Cash ROA 20.4% 4.0% 108.5% Cash ROE 46.9% 20.1% 110.1%
  25. 25. PERFORMANCE Cash Flow-to-Revenue Cash ROA Cash ROE
  26. 26. COVERAGE Assumed figures are as of FY 2012 Mcdonald’s Burger King Yum! Debt Coverage 0.35x 0.05x 0.34x Debt Payment 16.64x 0.99x 15.40x
  27. 27. PERFORMANCE Debt Coverage Debt Payment
  28. 28. SUMMARY OF ANALYSIS • Market momentum • Very Liquid • Not overvalued • Strong Cash Flow • Highly Profitable • Can pay debts • Highly Efficient • Solvent
  29. 29. INVESTMENT RECOMMENDATION Fundamentally speaking, we recommend a strong BUY position in Mcdonald’s
  30. 30. End of Presentation

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