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On Monday, Barclays (LON:BARC) analyst Jeffrey Bernstein reaffirmed an Overweight rating on McDonald’s Corporation (NYSE:MCD) shares, with a steady price target of $347.00. Bernstein highlighted McDonald’s significant cash returns to shareholders, noting the company had distributed approximately $1.8 billion. This return included around $516 million through share repurchases of approximately 1.7 million shares, averaging $303.53 per share, and about $1.3 billion paid in quarterly dividends, resulting in a yield of roughly 2.4%. According to InvestingPro, McDonald’s has maintained dividend payments for an impressive 50 consecutive years, with a 16.5% dividend growth over the last twelve months. The company currently trades above its Fair Value estimate, with an overall Financial Health score rated as "GOOD."
The analyst also provided insights into McDonald’s financial guidance for the year 2025, which largely mirrors the projections set for 2024. A notable exception in the 2025 outlook is the increased capital expenditure (CapEx), expected to be between $3.0 billion and $3.2 billion. This figure exceeds the consensus estimate of approximately $2.9 billion and is up from the $2.5 billion to $2.7 billion range anticipated for 2024. Despite the increase in CapEx, the number of new unit openings is only slightly higher, with approximately 2,200 new units planned for 2025 compared to the 2024 guidance of around 2,100. InvestingPro data shows the company maintains strong profitability with a gross margin of 56.6% and operates with a moderate level of debt. Get access to 10+ additional exclusive ProTips and comprehensive financial metrics with InvestingPro.
Bernstein pointed out that the expected free cash flow conversion rate for 2025 is projected in the low-to-mid 80% range, a decline from the 2024 guidance of around 90%. Other aspects of the guidance for 2025 remain consistent with the previous year, with the exception of a smaller year-over-year increase in interest expenses.
Barclays’ stance on McDonald’s reflects confidence in the company’s financial strategy and its ability to continue delivering value to its shareholders. The detailed analysis by Bernstein underscores the company’s commitment to balancing growth with financial returns, even as it navigates through capital investments and market expectations.
In other recent news, McDonald’s financial performance for a specified period has been disclosed in comprehensive data, now part of the public record. This transparency is part of the company’s ongoing commitment to regulatory compliance. Piper Sandler adjusted its outlook on McDonald’s shares, reducing the price target to $290 while maintaining a Neutral rating. The firm notes that investor expectations for McDonald’s U.S. same-store sales in the fourth quarter align with the consensus estimate of a 0.6% decrease.
KeyBanc Capital Markets also adjusted its outlook on McDonald’s shares, reducing the price target to $320 while maintaining an Overweight rating. This adjustment was based on a downward revision of McDonald’s U.S. same-store sales growth estimate for the fourth quarter of 2024 and the first quarter of 2025.
Moreover, McDonald’s has extended its strategic partnership with Cognizant Technology Solutions Corp (BVMF:CTSH34)., focusing on enhancing operational efficiency, customer experience, and employee empowerment using advanced technology. Lastly, Morgan Stanley (NYSE:MS) maintained its Overweight rating on McDonald’s shares but slightly reduced the price target to $336, highlighting the company’s strong performance despite variable market trends.
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