McDonald's Golden Arches Under Pressure as Earnings Growth Stalls

McDonald's, the world's largest restaurant chain, has been a stalwart performer for investors in recent years. Despite its consistent dividend payments and share buybacks, the company's earnings growth has been less steady.

The firm's franchise model is increasingly driving revenue, with 61.5% of total revenue coming from franchises in fiscal 2025. The US accounts for about 40.2% of McDonald's revenue, highlighting its broad international reach and asset-light operating model.

Analysts project earnings growth to be around 6% in 2026, 8.3% in 2027, and 7.8% in 2028, while revenue is expected to grow at a slower pace of 5.1% over the next two years. The consensus price target for MCD stock is approximately $318, implying about 15% upside from current levels.

However, McDonald's faces several risks, including weaker consumer spending, rising labor and food costs, intense competition, and regulatory pressures. The company has historically found support near 20 times forward earnings and around 16-17 times forward free cash flow, with shares currently trading near these levels.