Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
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McDonald’s Corp. pages available for free this week:
- Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Current Valuation Ratios
McDonald’s Corp., current price multiples
| McDonald’s Corp. | Airbnb Inc. | Booking Holdings Inc. | Chipotle Mexican Grill Inc. | Starbucks Corp. | Consumer Services | Consumer Discretionary | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||
| Current share price (P) | ||||||||||
| No. shares of common stock outstanding | ||||||||||
| Earnings per share (EPS) | ||||||||||
| Operating profit per share | ||||||||||
| Sales per share | ||||||||||
| Book value per share (BVPS) | ||||||||||
| Valuation Ratios (Price Multiples) | ||||||||||
| Price to earnings (P/E) | ||||||||||
| Price to operating profit (P/OP) | ||||||||||
| Price to sales (P/S) | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
McDonald’s Corp., historical price multiples
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Price to earnings (P/E) | ||||||
| Price to operating profit (P/OP) | ||||||
| Price to sales (P/S) | ||||||
| Price to book value (P/BV) |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The financial ratios over the five-year period exhibit varying trends with fluctuations in valuation metrics.
- Price to Earnings (P/E) Ratio
- The P/E ratio started at 33.31 in 2020, decreased significantly to 24.15 in 2021, then increased again to 31.22 in 2022. Following this peak, it declined to 25.23 in 2023 before slightly rising to 27.00 in 2024. Overall, the P/E ratio shows volatility with no clear linear trend, suggesting periodic changes in investor expectations of future earnings or earnings performance variability.
- Price to Operating Profit (P/OP) Ratio
- This ratio followed a pattern somewhat similar to the P/E ratio. It declined from 21.51 in 2020 to 17.59 in 2021, indicating improved operating profitability valuation or operating profit growth. It rose again to 20.58 in 2022, then dropped to 18.35 in 2023, with a slight increase to 18.95 in 2024. The fluctuations suggest some variability in operating profit or market valuation adjustments.
- Price to Sales (P/S) Ratio
- The P/S ratio remained relatively stable compared to the other ratios, starting at 8.20 in 2020. It decreased marginally to 7.85 in 2021, then increased steadily over the following years to 8.32 in 2022, 8.38 in 2023, and 8.56 in 2024. This indicates that the market valuation relative to sales has been gradually rising, possibly reflecting steady sales growth or increased investor confidence in sales quality.
- Price to Book Value (P/BV) Ratio
- Data for the Price to Book Value ratio is not available for the analyzed period, preventing any conclusions regarding trends in this valuation metric.
In summary, the valuation ratios illustrate a cycle of contraction and expansion with the P/E and P/OP ratios showing more variability, while the P/S ratio reveals a moderate upward trend. This could imply that while earnings and operating profits experienced some fluctuation or market reevaluation, sales valuations remained more stable and progressively increased over the period.
Price to Earnings (P/E)
McDonald’s Corp., historical P/E calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Net income (in millions) | ||||||
| Earnings per share (EPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/E ratio4 | ||||||
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| Starbucks Corp. | ||||||
| P/E Ratio, Sector | ||||||
| Consumer Services | ||||||
| P/E Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Data adjusted for splits and stock dividends.
2 2024 Calculation
EPS = Net income ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of McDonald’s Corp. Annual Report.
4 2024 Calculation
P/E ratio = Share price ÷ EPS
= ÷ =
5 Click competitor name to see calculations.
The analysis of the financial data indicates several noteworthy trends over the five-year period under review.
- Share Price
- The share price has shown a consistent upward trend, increasing from $211.32 in 2020 to $310.72 in 2024. This represents a significant appreciation, suggesting positive market sentiment and possibly strong business performance or growth expectations.
- Earnings Per Share (EPS)
- EPS experienced some fluctuations during the period. There was a notable increase from $6.34 in 2020 to $10.15 in 2021, indicating improved profitability. However, EPS declined to $8.44 in 2022, before rising again to $11.73 in 2023 and settling slightly lower at $11.51 in 2024. Despite the dip in 2022, the overall trend from 2020 to 2024 points to growth in earnings capacity, underscoring a general strengthening in profitability.
- Price-to-Earnings Ratio (P/E)
- The P/E ratio exhibits a fluctuating pattern: starting at 33.31 in 2020, then declining substantially to 24.15 in 2021, rising again to 31.22 in 2022, falling to 25.23 in 2023, and slightly increasing to 27 in 2024. These variations suggest alternating investor valuation perceptions relative to earnings. The decline in 2021 followed by an increase in 2022 may reflect market reassessments triggered by changes in earnings or broader market conditions. The moderate levels in the latter years imply a relatively stable but cautious investor stance.
Price to Operating Profit (P/OP)
McDonald’s Corp., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Operating income (in millions) | ||||||
| Operating profit per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/OP ratio4 | ||||||
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| Starbucks Corp. | ||||||
| P/OP Ratio, Sector | ||||||
| Consumer Services | ||||||
| P/OP Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Data adjusted for splits and stock dividends.
2 2024 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of McDonald’s Corp. Annual Report.
4 2024 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= ÷ =
5 Click competitor name to see calculations.
- Share Price Trend
- The share price exhibits a consistent upward trajectory over the five-year period analyzed. Starting at $211.32 in 2020, it increased steadily to reach $310.72 by the end of 2024, indicating sustained investor confidence and a positive market valuation progression.
- Operating Profit Per Share
- Operating profit per share shows variability across the periods. Beginning at $9.82 in 2020, it rose significantly to $13.93 in 2021, followed by a slight decline to $12.81 in 2022. Subsequently, it experienced a marked recovery and growth, reaching $16.13 in 2023 and slightly increasing to $16.39 in 2024. This pattern suggests some volatility in operational profitability but overall improvement towards the end of the period.
- Price to Operating Profit Ratio (P/OP)
- The P/OP ratio fluctuates over the reviewed periods. Starting relatively high at 21.51 in 2020, it declined to 17.59 in 2021, then increased to 20.58 in 2022. Thereafter, it decreased again to 18.35 in 2023 with a modest adjustment to 18.95 in 2024. These variations indicate changing market perceptions of the company's valuation relative to its operating profit per share, with periods of both premium and more moderate valuation multiples.
- Overall Insights
- The data reflect a generally positive growth in share price alongside improving operating profit per share, particularly in the latter years. Fluctuations in the P/OP ratio point to varying investor sentiment and market valuation dynamics relative to operational performance. The upward trend in key financial indicators suggests enhanced profitability and shareholder value creation over the five-year span.
Price to Sales (P/S)
McDonald’s Corp., historical P/S calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Revenues (in millions) | ||||||
| Sales per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/S ratio4 | ||||||
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| Starbucks Corp. | ||||||
| P/S Ratio, Sector | ||||||
| Consumer Services | ||||||
| P/S Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Data adjusted for splits and stock dividends.
2 2024 Calculation
Sales per share = Revenues ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of McDonald’s Corp. Annual Report.
4 2024 Calculation
P/S ratio = Share price ÷ Sales per share
= ÷ =
5 Click competitor name to see calculations.
- Share Price Trend
- The share price exhibited a consistent upward trajectory over the five-year period. Starting at $211.32 at the end of 2020, it increased annually to reach $310.72 by the end of 2024. This reflects a total appreciation of approximately 47%, suggesting sustained investor confidence and potentially strong financial performance or growth expectations.
- Sales Per Share Trend
- Sales per share also showed a general upward trend. Beginning at $25.76 in 2020, the figure rose steadily to $36.28 by 2024. There was a notable increase between 2020 and 2021, with more moderate growth in the subsequent years, indicating consistent revenue expansion relative to the number of shares outstanding.
- Price-to-Sales (P/S) Ratio
- The P/S ratio fluctuated slightly but maintained a relatively stable range. It started at 8.2 in 2020, dipped to 7.85 in 2021, and then increased progressively each year to reach 8.56 by 2024. This suggests that the market valuation per unit of sales remained robust, with a minor dip possibly reflecting market adjustments or changes in investor perception before recovering.
- Overall Analysis
- The data indicates a strong and steady growth pattern in both market valuation and revenue generation per share. The consistent increase in share price coupled with rising sales per share suggests effective operational performance and possibly favorable market conditions. The relatively stable P/S ratio implies that the market's valuation metrics remained consistent, with no significant overvaluation or undervaluation trends detected during the period.
Price to Book Value (P/BV)
McDonald’s Corp., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Shareholders’ equity (deficit) (in millions) | ||||||
| Book value per share (BVPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/BV ratio4 | ||||||
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| Starbucks Corp. | ||||||
| P/BV Ratio, Sector | ||||||
| Consumer Services | ||||||
| P/BV Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Data adjusted for splits and stock dividends.
2 2024 Calculation
BVPS = Shareholders’ equity (deficit) ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of McDonald’s Corp. Annual Report.
4 2024 Calculation
P/BV ratio = Share price ÷ BVPS
= ÷ =
5 Click competitor name to see calculations.
The financial data presented indicates that the share price of the company has shown a consistent upward trajectory over the five-year period from December 31, 2020, to December 31, 2024. Starting at $211.32, the share price increased steadily each year, reaching $310.72 by the end of 2024. This represents a significant growth in market valuation over the time span under review.
In contrast, the book value per share (BVPS) figures remain negative throughout the period, which suggests that the company's net assets on a per-share basis are in deficit. The BVPS was at its lowest point of -10.5 in 2020, improved somewhat to -6.19 in 2021, then fluctuated mildly in subsequent years, ending at -5.31 in 2024. This negative BVPS, despite some improvements, may indicate continued challenges related to the company’s equity position.
The price-to-book value (P/BV) ratio was not provided, so a direct analysis of the valuation metric relative to book value cannot be performed. However, considering the share price increase alongside negative BVPS values, it is likely that the P/BV ratio, if calculated, would be negative or not meaningful, reinforcing the notion that market valuation and accounting book value are significantly divergent in this case.
Overall, the data reflects strong market confidence as evidenced by rising share prices, while the persistent negative book value per share indicates underlying financial considerations that may warrant further investigation. This divergence suggests that investors may be placing significant value on intangible assets, future growth prospects, or other factors not captured by the book value metric.