McDonald’s Corp. (NYSE:MCD)

Valuation multiples exhibit a cyclical pattern characterized by a period of expansion during 2022 and early 2023, followed by a correction and subsequent stabilization through 2025, ending with a contraction in the first quarter of 2026.

Price to Earnings (P/E) Ratio

The P/E ratio experienced significant volatility, peaking at 34.24 in September 2022. A downward correction followed, reaching a low of 22.51 by March 2024. The ratio then stabilized, fluctuating between 23.42 and 27.63 throughout 2024 and 2025, before returning to a lower level of 23.23 in March 2026.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio mirrored the trend of the P/E ratio, showing a steady increase from 17.56 in March 2022 to a peak of 22.47 in March 2023. A subsequent decline led to a trough of 16.33 in March 2024. While there was a moderate recovery reaching 19.09 by December 2025, the ratio concluded the period at its lowest point of 15.87 in March 2026.

Price to Sales (P/S) Ratio

The P/S ratio climbed from 7.68 in March 2022 to a high of 9.20 in March 2023. Following this peak, the ratio contracted to 7.51 by March 2024. A gradual upward trend was observed through 2024 and 2025, peaking again at 8.80 in December 2025, before a sharp decline to 7.34 in March 2026.

Overall, the synchronized movement across these three valuation metrics suggests a broad shift in market sentiment. The peak valuation seen in early 2023 across P/E, P/OP, and P/S ratios indicates a period of high premium, while the convergence toward lower multiples by March 2026 suggests a general decompression of valuation across earnings, operating profit, and revenue streams.

Analysis of the valuation metrics reveals a period of earnings expansion coupled with fluctuating market multiples. While the share price generally trended upward for the majority of the observed duration, the P/E ratio experienced significant compression as earnings per share improved, suggesting a shift from valuation expansion to earnings-driven growth.

Share Price Performance

The share price exhibited a general upward trajectory, rising from 246.64 USD in March 2022 to a peak of 333.05 USD in December 2025. A significant correction is observed in the final period, where the price decreased to 283.70 USD by March 2026.

Earnings Per Share (EPS) Growth

A positive growth trend in EPS is observed following a period of volatility in 2022. After hitting a low of 8.07 USD in September 2022, EPS climbed consistently, reaching 12.21 USD by March 2026. This steady increase indicates an improvement in net profitability per share over the period.

P/E Ratio Dynamics

The P/E ratio reached its maximum of 34.24 in September 2022, followed by a downward trend that bottomed at 22.51 in March 2024. Throughout 2024 and 2025, the ratio stabilized within a range of 25.61 to 27.63, reflecting a period of relative valuation equilibrium before declining to 23.23 in March 2026.

The relationship between share price and operating profit per share from March 2022 through March 2026 indicates a period of fundamental operational growth accompanied by a gradual contraction in the valuation multiple.

Share Price Performance

An overall upward trajectory is observed in the share price, which rose from 246.64 in March 2022 to a peak of 333.05 in December 2025. Despite this growth, the price exhibited volatility, including a significant decrease to 283.70 by March 2026.

Operating Profit per Share Trends

Operating profit per share demonstrated a consistent and steady increase throughout the analyzed period. Starting at 14.05 in March 2022, the figure climbed incrementally to reach 17.87 by March 2026, reflecting sustained improvement in core operational efficiency.

Price to Operating Profit (P/OP) Analysis

The P/OP ratio experienced a period of expansion in the first year, reaching a peak of 22.47 in March 2023. Following this peak, a general downward trend in the multiple is evident. The ratio fluctuated between 16.33 and 19.19 throughout 2024 and 2025, eventually descending to its lowest point of 15.87 in March 2026.

Valuation Synthesis

The divergence between the rising operating profit per share and the declining P/OP ratio suggests that while the company's operational earnings strengthened, the market's willingness to pay a premium for those earnings diminished over time. The contraction of the multiple implies a transition toward a more conservative valuation of the company's operating performance by the end of the period.

The valuation of the common stock relative to sales exhibits a period of volatility between March 2022 and March 2026. While sales per share demonstrated a consistent and steady upward trajectory throughout the period, the Price to Sales (P/S) ratio fluctuated, indicating that changes in market valuation frequently outpaced or decoupled from actual revenue growth per share.

Sales per Share Performance

A sustained growth pattern is observed in sales per share, which increased from 32.13 US$ in March 2022 to 38.63 US$ by March 2026. This represents a consistent expansion in the revenue generated per single share of stock, suggesting strong operational performance and top-line growth over the analyzed timeframe.

Share Price Volatility

The share price experienced significant fluctuations, starting at 246.64 US$ in March 2022 and reaching a peak of 333.05 US$ in December 2025. A notable decline occurred in the final quarter of the sequence, with the price dropping to 283.70 US$ by March 2026, which directly influenced the final valuation ratios.

Price to Sales (P/S) Ratio Trends

The P/S ratio moved through several distinct phases. An initial expansion phase is noted from March 2022 (7.68) to a peak of 9.20 in March 2023. This was followed by a contraction phase, where the ratio declined to 7.51 by March 2024. A recovery phase ensued, with the ratio climbing back to 8.80 by December 2025, before ending at a period-low of 7.34 in March 2026.

Valuation Analysis

The divergence between the steady increase in sales per share and the volatile P/S ratio suggests that the stock's market valuation was driven more by investor sentiment and external market conditions than by linear revenue growth. The sharp decline in the P/S ratio in March 2026, despite the highest recorded sales per share (38.63 US$), highlights a significant correction in the market's willingness to pay a premium for each dollar of sales.

The financial data reveals a period of stock price appreciation coupled with a consistent improvement in the company's book value per share, although the latter remained negative throughout the entire observation window.

Share Price Performance

The share price exhibited a general upward trajectory from March 31, 2022, to December 31, 2025. After fluctuating between 246.64 US$ and 295.92 US$ during 2022 and 2023, the price entered a sustained growth phase in 2024, eventually peaking at 333.05 US$ by the end of 2025. A subsequent correction is noted in the first quarter of 2026, where the price declined to 283.70 US$.

Book Value per Share (BVPS) Trends

A consistent recovery trend is observed in the book value per share. Starting from a low of -8.97 US$ in September 2022, the BVPS steadily increased, reducing the deficit over time. By December 31, 2025, the value had improved to -2.52 US$, and further progressed to -1.81 US$ by March 31, 2026. This steady climb indicates a gradual strengthening of the equity position or a reduction in accumulated deficits.

Price to Book Value (P/BV) Interpretation

Because the book value per share remained negative across all reported quarters, the resulting P/BV ratios are mathematically negative. In a valuation context, this indicates that the company's liabilities exceed its assets, a condition often associated with aggressive share repurchase programs or significant accumulated losses. However, the convergence of the BVPS toward zero, combined with a rising share price, suggests a decoupling of market valuation from accounting book value.