1 / 12

McDonald’s

McDonald’s. CSIA Investment Presentation By: Ken Cramer. About McDonald’s. Market Capitalization of over 60 billion 23 billion in total revenues and 2.4 billion net income for 2007 McDonald’s has 31,377 restaurants in 118 countries The company employs 1.6 million people. Competitors – Yum!.

aiden
Download Presentation

McDonald’s

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. McDonald’s CSIA Investment Presentation By: Ken Cramer

  2. About McDonald’s Market Capitalization of over 60 billion 23 billion in total revenues and 2.4 billion net income for 2007 McDonald’s has 31,377 restaurants in 118 countries The company employs 1.6 million people

  3. Competitors – Yum! Yum! Brands operates KFC, Taco Bell, Pizza Hut and Long John Silvers They are the largest fast food provider with over 35,000 locations in 110 countries However, their global sales totaled only 10 billion in fiscal year 2007 McDonald’s gross margin and EBT margin are larger and increasing. Yum!’s margins are about 10 percentage points lower and stagnant

  4. Competitors – BKC & WEN Burger King has 11,300 stores in 69 countries. They had 2.2 billion in total revenue in 2007 Burger King’s gross margin is comparable to McDonald’s. Their EBT margin is increasing, but still about 10 percentage points lower than McDonald’s Wendy’s-Arby’s Group is smaller than Yum! and Burger King. In 2007 W/A had 1.26 billion in revenue. Their margins have been inconsistent at best Both companies have less of an international presence. Burger King only re-entered Japan last year. 77% of Wendy’s stores are in North America

  5. Why McDonald’s - Fundamentals McDonald’s has the largest international presence, providing the company with a firm foundation for global growth McDonald’s large size and cash reserves allow it to secure the necessary financing in order to maintain this growth in tight credit markets Their large size also helps them control the cost of goods, should commodity prices rise in the future. They have a solid business plan and a focus on value, both of which are key in the current market

  6. Global Presence

  7. Why McDonald’s – Investment Criteria Dividends have increased every year since 1976. In 2008 McDonald’s paid $2 of dividends per share (Yields: MCD: 3.5%, BKC: 1.3%, WEN: 1.6%, YUM: 3%) McDonald’s beat 3rd quarter earnings estimates McDonald’s shares have consistently beaten the market Currently their shares are attractively priced: P/E of 13.4 (WEN: 100+*, BKC: 14.2, YUM: 11.4, Industry: 14.6) Their shares have experienced extremely low volatility despite the current market conditions. *Using 2007 earnings – Current earnings are negative

  8. Shareholder Returns

  9. McDonald’s vs. the Market

  10. Potential Problems Health concerns and changing tastes: McDonald’s has announced plans to stop using oils that contain trans fats New types of menu items, including healthier options are helping to expand McDonald’s consumer base and reduce the “veto factor” Social criticisms: McDonald’s has launched a new campaign to fight the negative portrayal of its “McJobs.” 20 of the top 50 managers started in local restaurants Listed on the Dow Jones Sustainability Index for 3 consecutive years

  11. Valuation Intrinsic Value: Around $50 Revenue Growth: 7% EBITDA Margin: 26% WACC: 8%

  12. Thank You

More Related