Has McDonald’s Been Able To Appease Its Investors Amidst Turmoil In Its Topline?
- Despite seeing a shift in its operating structure towards a 100% franchise-based model which led to a slump in its revenues, and a slowdown in the U.S. restaurant industry, McDonald’s (NYSE:MCD) has managed to keep its investors happy. Its return on equity ratio increased in 2015, while it paid out higher dividends to its common shareholders.
- McDonald’s revenue fell in the period between 2013-2015 due to the acceleration in the pace of re-franchising its company-operated restaurants. The shift towards a 100% franchisee model has negatively impacted the consolidated revenues of the company as company-operated sales are being replaced by franchised sales, where the company only receives royalty payment based on a percentage of sales.
- Consequently, McDonald’s net income also decreased during the period. Despite this fall, we saw return on equity (ROE) increase to 45% in 2015.
- The company continued to pay stable dividends to its shareholders even as its net income suffered from a changing revenue mix. As a result, dividends as a percentage of earnings, or dividend payout ratio, of the company grew to 71% in 2015.
- Further, the company’s dividend yield, i.e., dividend as a percentage of stock price, also went up to 3.7% in 2015.
- The return ratios indicate that McDonald’s has strong fundamentals and continues to have confidence in its business even in the face of a slowing restaurant industry in the U.S.
Have more questions on McDonald’s? See the links below.
- McDonald’s Versus Burger King: Whose Franchisees Perform Better?
- McDonald’s Slows Down In Q2’16, Despite Growth In Comparable Store Sales
- McDonald’s Q2 FY 2016 Earnings Preview: Investment In Quality, All Day Breakfast To Drive Revenues
- McDonald’s 2016 Revenues To Decline YoY Despite Improvement; To Pick Up Pace Thereafter
- What’s McDonald’s Fundamental Value Based On Expected 2016 Results? (Updated After Q1 2016)
- By What Percentage Have McDonald’s Revenues And EBITDA Grown Over The Last Five Years?
- What Is McDonald’s Revenue & EBITDA Breakdown? (Updated After Q1 2016)
- How Has McDonald’s Revenue And EBITDA Composition Changed Over 2011-2015?
- McDonald’s Q1 FY 2016 Earnings Preview: All Day Breakfast To Drive Comp Sales In The US
- Where Will McDonald’s Revenue And EBITDA Growth Come From Over The Next Three Years? (Updated After Q1 2016)
Relevant Articles
- What To Expect From McDonald’s Q4 After Stock Up 13% Since 2023?
- After A 14% Top-Line Growth In Q2 Will McDonald’s Stock Deliver Another Strong Quarter?
- What To Expect From McDonald’s Stock Post Q2 Results?
- McDonald’s Stock Likely To Trade Lower Post Q1 Results
- McDonald’s Stock Up 16% Over Last Year, Can It Grow More?
- What To Expect From McDonald’s Stock Post Q4?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for McDonald’s
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)