Is MCD a buy, hold, or sell?
MCD carries a valuation grade of Hold. At a trailing P/E of 23.3, the stock trades at a 11% discount to the Consumer Cyclical sector median of 26.0x. Our discounted cash flow model produces an intrinsic range of $260–$445 — implying a +25% margin of safety at the current price of $282.52. The width of the DCF range reflects genuine uncertainty in the terminal growth rate assumption: the correct framework is a probability-weighted distribution over scenarios, not a single point estimate. See the DCF valuation framework for full methodology.
With a 9% beat rate on recent quarters, earnings predictability has been mixed. The most recent quarter delivered a 3.1% earnings surprise. Analyst estimate revisions are trending upward.
What are MCD's key risk factors?
With a beta of 0.41, MCD exhibits a low-volatility risk profile relative to the broad market. The 95th-percentile CVaR of -9.8% on a one-month horizon should inform position sizing directly: at a 10% portfolio weight, this tail event contributes approximately 1.0% of total portfolio loss in the worst 5% of months. Net margins of 31.6% are significantly above the Consumer Cyclical sector average of 10%, reflecting durable pricing power.
Implied volatility of 2.2% is below realized volatility of 17.0%, potentially making options relatively cheap. Insiders have been net sellers to the tune of $49.3M recently. While routine dispositions are common, the magnitude bears watching. Short interest is low at 1.5% of float, suggesting limited bearish conviction.
How does MCD fit in a diversified portfolio?
At typical HENRY portfolio weights — 10–20% of the equity allocation — MCD carries a beta of 0.41, meaning it amplifies broad market moves proportionally. The appropriate weight is not a function of conviction alone, but of the full covariance structure across all holdings. See the Ledoit-Wolf covariance framework for the methodology behind these calculations.
Among closely correlated names, MCD shows the strongest co-movement with PG (0.45), KO (0.44), WMT (0.30). Investors seeking diversification should note these correlation dynamics when constructing multi-asset portfolios.
True portfolio risk is a function of the full covariance structure across all holdings — not individual stock metrics. The Portfolio Health Check quantifies this at the portfolio level: it surfaces hidden concentration, marginal CVaR contributions, and the degree to which your overall allocation deviates from an optimal risk-adjusted mandate. The MCD analysis here is a single node in that larger structure.
For the portfolio construction framework underpinning MCD’s position sizing and conviction rating — including IPS guardrails, Black-Litterman allocation, and CVaR constraints — see: Investment Policy Statement Framework →
