McDonald’s (NYSE:MCD) competes with Wendy’s (NYSE:WEN) and Burger King (NYSE:BKC) in the fast food market, and with Starbucks (NASDAQ:SBUX) in the specialty coffee market. We currently have a Trefis price estimate of around $74 for McDonald’s stock, about 2% above the current market price of around $72.
Trefis members have created forecasts for two key drivers of McDonald’s stock over the last week: (1) Rent Revenues as a percentage of Franchised Sales and (2) Number of Franchised & Affiliated McDonald’s Restaurants. The members’ forecasts suggest that Rent Revenues as a percentage of Franchised Sales as well as Number of Franchised & Affiliated McDonald’s Restaurants will trend mostly in line with Trefis estimates. These projections suggest a combined upside of around 1% for McDonald’s stock.
We estimate Franchisee Rent & Revenues account for 63% of the $74 Trefis price estimate for the MCD stock. Hence the stock is quite sensitive to (1) Rent Revenues as a percentage of Franchised Sales and (2) Number of Franchised & Affiliated McDonald’s Restaurants. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
1. Rent Revenues as a percentage of Franchised Sales
The average of forecasts for Rent Revenues as a percentage of Franchised Sales created by Trefis members are in line with Trefis estimates. The baseline Trefis estimate projects an increase from 8.7% in 2010 to around 9% by the end of the Trefis forecast period. In the past, Rent Revenues as a percentage of Franchised Sales has decreased from 9.2% in 2005 to 8.6% in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of McDonald’s's stock to Rent Revenues as a percentage of Franchised Sales.
Our complete analysis for Rent Revenues as a percentage of Franchised Sales is here.
2. Number of Franchised & Affiliated McDonald’s Restaurants
The average of forecasts for Number of Franchised & Affiliated McDonald’s Restaurants created by Trefis members indicated a projected increase from 27,584 in 2010 to around 29,761 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 27,221 in 2010 to 29,341 by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for McDonald’s's stock. In the past, Number of Franchised & Affiliated McDonald’s Restaurants has increased from 22,593 in 2005 to 26,216 in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of McDonald’s's stock to Number of Franchised & Affiliated McDonald’s Restaurants.
