McDonald's Undervalued After Recent Declines

McDonald's (MCD) stock has underperformed the S&P 500 in most of 2026, but it offers a reasonable valuation after recent declines. The fast-food restaurant chain reported 4% revenue growth in Q2 2026, in line with its performance in 2025. However, investors were disappointed by weak comparable sales growth, which was driven by new store openings rather than underlying business momentum.

Despite modest comparable sales growth and refinancing headwinds, analysts expect McDonald's to deliver earnings of about $13.98 in 2027, representing growth of about 8% relative to the $12.93 EPS estimate for 2026. The company is expected to outperform restaurant peers in a recession due to its low-cost and affordability focus.

The new President for McDonald's USA, Skye Anderson, may help address weak U.S. sales growth, which could be a short-term catalyst for the stock. Longer term, interest rate headwinds should moderate if the Fed resumes rate cuts in H2 2027 and into 2028.