Key Points
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A variety of business headwinds have caused a substantial pullback for McDonald’s stock.
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McDonald’s is a great company, but challenges facing the business could persist.
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McDonald’s (NYSE: MCD) stock has been under pressure this year. The company’s share price is down just under 20% across 2026’s trading, and it’s off almost 28% from its lifetime high.
The company is facing declining consumer traffic, more challenging unit economics, and price increases that have complicated its value proposition, as well as the possibility that GLP-1s and other diet drugs will become a sustained limiting factor on demand.
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With the stock down substantially, is McDonald’s a good buy right now?
McDonald’s share sell-off has lowered the company’s forward price-to-earnings ratio to roughly 19. Sell-offs have also pushed the company’s dividend yield up to roughly 3%, and the payout looks well covered despite recent headwinds facing the business.
While the company’s forward P/E is roughly in line with the S&P 500 (SNPINDEX: ^GSPC) and looks low on a historical basis, the company’s valuation should also be viewed in the context of its growth. Global same-store sales increased 1.3% annually in the second quarter, with gains primarily driven by higher ticket prices amid unfavorable traffic trends. Meanwhile, earnings per share increased roughly 5% year over year on a currency-adjusted basis.
McDonald’s is a great business, but there is currently no shortage of companies in the S&P 500 that offer a more appealing profile in terms of earnings growth and valuation. The headwinds facing the business are likely to continue in the near term, and I think that patient investors may be able to buy the stock at an even steeper discount.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald’s and short January 2028 $340 calls on McDonald’s. The Motley Fool has a disclosure policy.
