McDonald’s Stock: Is It Time to Buy or Hold Heading into 2025?
Experiencing the disappointment of an out-of-order ice cream machine at McDonald’s (NYSE: MCD) can feel frustrating for fans and investors alike. In 2024, investors have had their share of headaches, as disappointing growth and weak earnings have caused shares to linger, dropping about 1% over the past year compared to the broader market.
The question now is whether this iconic restaurant chain has lost its shine or if there are reasons to be optimistic about McDonald’s in 2025.
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Let’s explore the investment outlook for McDonald’s stock.
Reasons to Consider Buying or Holding McDonald’s Stock
With over 40,000 locations across more than 100 countries, McDonald’s is a leading name in the restaurant industry. Known for offering quality meals at reasonable prices, the company has delivered impressive shareholder returns throughout its history; the stock rose 293% over the last decade.
However, recent share price drops reflect disappointing financial performance compared to a stronger 2023. For the nine-month period ending on September 30, 2024, total revenue increased only 2% year-over-year, while adjusted earnings per share (EPS) fell 1%. The company’s operating margins are under pressure from ongoing costs, and international comparable sales have dropped, countering a mere 0.3% growth in the U.S. last quarter.
On a positive note, McDonald’s “Accelerating the Arches” strategy aims to refresh marketing initiatives to enhance brand appeal and customer involvement while maintaining menu quality.
This plan focuses on four key areas—digital engagement, drive-thru convenience, delivery options, and expanding into new markets—all designed to ensure sustainable growth.
Image source: Getty Images.
Wall Street is optimistic about a rebound in 2025, projecting a 3.8% revenue increase and a 6.8% rise in adjusted EPS, expected to hit $12.61.
Ultimately, those who believe in McDonald’s capability to regain its growth path and improve earnings have a reason to hold or purchase the stock for long-term gains.
| Metric | 2024 Estimate | 2025 Estimate |
|---|---|---|
| Revenue | $26.1 billion | $27 billion |
| Revenue growth (YOY) | 2.2% | 3.8% |
| EPS | $11.81 | $12.61 |
| EPS growth (YOY) | (1.1%) | 6.8% |
Data source: Yahoo Finance. YOY = year over year.
Reasons to Consider Selling McDonald’s Stock
It’s hard to imagine life without McDonald’s, a favorite for millions and a staple in the dining landscape. The company is positioned well to thrive long into the future, but critical evaluation is necessary for investors assessing if it’s the right time to invest.
A significant challenge moving forward will be for McDonald’s to defend its market share in a highly competitive environment. Shifting consumer preferences towards healthier options have resulted in intense competition in the fast-food sector.
Moreover, with shares trading around 25 times its 2024 consensus EPS in terms of forward price-to-earnings (P/E) ratio, McDonald’s valuation aligns closely with its average over the last decade. Given the modest growth outlook, it remains unclear whether the stock merits any premium in today’s market.
Investors skeptical about McDonald’s growth potential, especially alongside rapidly growing competitors like Chipotle or newer brands such as Cava Group and Sweetgreen, may find it prudent to exit their position.
MCD PE Ratio (Forward) data by YCharts
A Wait-and-See Strategy Is Worth Considering
The upcoming quarters will be crucial for McDonald’s. They need to show stronger financial results and improved comparable sales, particularly in their international markets.
Because of the recent uncertainty and slow performance, adopting a wait-and-see approach until 2025 trends become clearer is sensible. Established shareholders are likely to maintain their positions, yet new investors might find alternatives that are more compelling in the current market.
Should You Invest $1,000 in McDonald’s Today?
Before committing to buy McDonald’s stock, it’s worth considering some insights:
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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
