McDonald's (MCD): US slowdown, records everywhere else

2026-08-04 · By Lubin Danilo, founder of Lubin Investment

MCD: see the full analysis on Lubin Investment

McDonald's narrowly beat the profit consensus this quarter but missed on revenue: comparable sales are slowing in the US while franchised margins abroad hit a record. My quality filter passes only 6 out of 10 criteria, and my model judges the current price clearly excessive. Here are the numbers, in two tables.

A two-speed quarter: US slowdown, momentum elsewhere

McDonald's reported its second-quarter results, for the period ended June 30, this Tuesday, August 4, 2026 (official McDonald's press release). Adjusted earnings per share came in at $3.38, up 6%, a hair above the analyst consensus of $3.35. Consolidated revenue grew 4% to $7.1 billion, slightly below expectations. The breakdown by region tells a more interesting story than these two headline numbers:

Indicator (Q2 2026)	Value	What it reveals
US comparable sales	+0.8%	The brand's historical market is clearly slowing
International Operated Markets comparable sales	+1.5%	Notably stronger than the US
International Developmental Licensed Markets comparable sales	+1.9%	The most dynamic region this quarter
Loyalty program systemwide sales (trailing 12 months, 70 markets)	$40B (+20%)	The loyalty program is becoming a genuine growth engine
90-day active loyalty users	~220 million (+13%)	The identified customer base is growing fast
Appointment	Skye Anderson, new President of McDonald's USA	The company itself acknowledges an execution problem to fix in its home market

"Comparable sales" means sales from restaurants open at least a year, on a like-for-like basis: it isolates real customer demand from the mechanical effect of new openings. The fact that McDonald's named a new president for its US market, its most important one, the very same day as earnings, is not a calendar coincidence: it is a clear signal the company itself sees an execution problem to fix at home, even as it celebrates momentum elsewhere.

What my quality filter says, independent of this quarter

Criterion	Value	Status
Net margin	31.6%	✅ Pass
Sales growth (5 years)	4.0%/year	❌ Fail
Free cash flow per share growth	2.6%/year	❌ Fail
Share count under control	-1.22%/year	✅ Pass
Free cash flow margin	25.0%	✅ Pass
Expanding margins	Yes	✅ Pass
Cash return on invested capital	13.2%	⚠️ Borderline
Debt load (net debt / FCF)	5.68 years of cash	❌ Fail
Earnings converted to cash	79%	⚠️ Borderline
Net cash conversion cycle	7 days	⚠️ Borderline

My site gives McDonald's a quality score of 6 out of 10. The point worth explaining is the debt: 5.68 years of cash to pay it off, which trips my strict debt criterion. That number is not, on its own, a distress signal. McDonald's is also, structurally, the landlord for most of the locations its franchisees operate: the company owns the land and building, collecting rent and a royalty on each franchisee's sales, a model closer to a commercial landlord than a plain restaurant operator. This debt largely funds that real estate portfolio and share buybacks, not a hole in the cash register. But my criterion stays strict by choice: a counter-intuitive number deserves an explanation, not an excuse.

Now the price. McDonald's trades at 27.9 times its free cash flow (P/FCF, the stock price divided by the cash generated each year). That level sits at the 72nd percentile of its own five-year history: more expensive than usual for this specific stock, not just in absolute terms. My model, which projects the cash-per-share trajectory over five years using conservative assumptions (methodology detailed by Aswath Damodaran), sets a fair buy price of $86.03, against a $268.34 quoted price: a 67.9% overvaluation. A brand everyone knows, remarkably resilient, but whose price already assumes durable growth that this very quarter's US slowdown is starting to call into question. You can track these figures live on McDonald's analysis page, and see exactly how I calculate this fair buy price in my full methodology.

FAQ

Did McDonald's beat or miss its Q2 2026 results?

Both at once: adjusted earnings per share ($3.38) narrowly beat the consensus ($3.35), but revenue ($7.1B) narrowly missed expectations. A close beat, not a strong signal either way.

Why is McDonald's slowing down in the US?

US comparable sales grew only 0.8% this quarter, versus 1.5% to 1.9% internationally. The company responded the same day by naming a new president for its US market, a sign it acknowledges an execution problem to fix in its home market.

Is McDonald's stock cheap or expensive in 2026?

According to my model, it is overvalued by 67.9%: my fair buy price sits at $86.03 against a $268.34 quoted price. It also trades at the 72nd percentile of its own five-year P/FCF history, so more expensive than usual for this specific stock.

Is McDonald's debt a concern?

The figure (5.68 years of cash to pay it off in full) trips my strict criterion, but it needs context: McDonald's owns the real estate for most of its restaurants and collects rent from franchisees, a model that structurally justifies more debt than an ordinary restaurant.

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).