Another year completed and another annual report to go through. Back in late January, McDonald's Corporation (MCD) announced 4Q 2013 and full year earnings so what better time than the present to input the new data and update my valuation analysis. McDonald's Corporation closed trading at $96.18 on Monday, March 24th giving a current yield of 3.37%.
Analysts followed by Yahoo! Finance expect McDonald's Corp. to grow earnings 7.78% per year over the next five years and I've assumed they can grow at 5.84% (75% of 7.78%) for the next 3 years and at 4.50% per year thereafter. Running these numbers through a three-stage DCF analysis with a 10% discount rate and summing over 30 years yields a fair value price of $106.50. This means the shares are trading at a 9.7% discount to the discounted cash flow analysis.
Click here to read the rest of the analysis.
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