Can McDonald’s Stock Bounce Back in 2025 After a Rocky 2024? Investors Weigh In
Written by
G. Brian Davis
Edited by
Jenna Klaverweiden
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McDonald’s investors haven’t been lovin’ it in recent months.
“There’s no doubt about it: McDonald’s fourth-quarter results were disappointing,” explained Jeremy Bowman, stock analyst at The Motley Fool. “The company missed analyst estimates on the top and bottom lines. Sales growth was flat, underperforming inflation, and profits were flat as well.”
An E. coli outbreak affecting the company’s U.S. onions certainly didn’t help its domestic numbers. In fact, U.S. sales slumped in the fourth quarter of 2024. But the company’s international sales also limped along in the fourth quarter, rising just 0.4% and finishing the year down 0.1% overall. As for the management team’s explanation, it noted downward consumer spending and growing financial pressure among lower-income families.
Plus, according to Yahoo Finance, McDonald’s stock underperformed in 2024. Does that make now a good time to “buy the dip” for the Golden Arches, or are investors better off waiting out McDonald’s struggles?
McDonald’s Turnaround Strategy
As the management team revealed the lousy numbers from the end of 2024, it also laid out a road map to return to growth, as reported by Fortune.
To begin with, Mickey D’s launched a new McValue platform in January to try to lure back value-conscious customers. Along similar lines, the company will bring back Snack Wraps to its U.S. menu. It’s also doubling down on chicken in general and adding new chicken strips to the menu.
While the timing isn’t perfect, given the soaring price of eggs, the company also plans to push breakfast this year. It celebrates the 50th anniversary of its breakfast menu in 2025.
“McDonald’s expects to recover from the E. coli outbreak by the second quarter,” Bowman said. “It also gave guidance calling for operating margin to rise to the mid-to-high 40% range, above 46.3% in 2024 (adjusted) due to improvements in its franchise business.”
The Case To Buy
Among the 26 Wall Street analysts polled by MarketBeat, 10 rate the stock a “Hold” and 16 rate it a “Buy.” None urge selling the stock currently. Professional trader and investor Vince Stanzione, founder of First Information and author of “The Millionaire Dropout,” loves McDonald’s.
“It’s actually one of my favorite long-term stocks. It has delivered compounded returns over 14.5% (dividend reinvested) for the last 20 years, beating the S&P 500 and Nasdaq,” he said. “When many think of McDonald’s they associate it with burgers and fries, but in reality, the Golden Arches is more about real estate and franchising fees. The company owns the land and buildings of most of its franchised locations, this provides a very steady stream of income.”
Lucas Barcelo, investor and founder of Thrivin, also sees reasons to like McDonald’s long term.
“Honestly, I’m cautiously optimistic about Mickey D’s bouncing back. They somehow always manage to overcome adversity. I think there are a few things that have always helped them stay afloat, one being their real estate component, and an additional thanks going out to its strong global presence,” he said. “If you’re buying, McDonald’s has a steady stream of dividends and cash flow, making it an ‘ole’ faithful’ of your portfolio.”
The Case To Hold or Sell
Even so, Barcelo isn’t buying new shares of McDonald’s right now. “We’re seeing healthier options rising as a trend across America, so I personally will be looking at other stock picks for now,” he explained.
Bowman is abstaining from new share purchases as well.
“At its current valuation, McDonald’s trades at a price-to-earnings ratio in the high 20s, about even with the S&P 500. At that price, I find the stock uncompelling for 2025. It’s too expensive given the lack of momentum and the challenging macroeconomic environment,” he explained. “I’d also like evidence that the McValue strategy is paying off before buying into it. Investors hoping for a Happy Meal from their stock picks should look elsewhere instead.”
Will McDonald’s right the ship in 2025? Most analysts predict it will have a better year than 2024, but that doesn’t mean you should dump your life savings into it. Take a cautious, conservative approach to adding any new shares to your portfolio — or just hold to see how well the management team’s plans pan out for 2025.
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