McDonald's Stock Shows Stability and Long-Term Upside Amid Upcoming Earnings Announcement

Technical Analysis

McDonald's Corporation (MCD) closed at $318.48 on April 23, 2025, showing a slight pullback of 0.19%. The stock traded between $314.84 and $319.90 intraday and remains near its 52-week high of $326.32. The 14-day RSI at 55 suggests a neutral momentum, with no immediate overbought or oversold conditions. The price is comfortably above both the 50-day ($307.92) and 200-day ($292.82) moving averages, consistent with an overall medium- to long-term uptrend. The MACD at 0.73 indicates bullish momentum over the past three months, although the stock faces resistance at $319.08. Support levels at $300.11 and a stop-loss near $309.02 provide technical cushions. Average volume (3.87 million) slightly exceeds current 3.21 million traded shares, indicating moderate trading interest but not a strong surge. The ATR of $2.48 reflects moderate volatility.

For the next trading day (April 24), the stock may see slight consolidation near resistance at $319, with limited downside given the solid support levels and elevated moving averages. The upcoming earnings announcement on May 1 is likely a key catalyst; investors may trade cautiously till then. Over the next week, barring unexpected news, MCD is expected to hover between $315 and $325, potentially testing the $319-$320 resistance zone, with upside capped until confirmed earnings results.

Fundamental Analysis

McDonald's trades at a forward-looking PE ratio of 27.96 based on trailing twelve months EPS of $11.39, suggesting a premium valuation reflective of its consistent earnings power and brand strength. The discounted cash flow analysis values the stock intrinsically at approximately $467.72, substantially above the current market price, implying significant long-term undervaluation.

The company’s business strategy remains robust, focusing on expanding to 50,000 locations by 2027, particularly higher-margin franchised outlets, supporting operating leverage and margin expansion. Initiatives such as value meal deals enhance volume and appeal to price-sensitive consumers. Capital allocation is shareholder-friendly, with over 100% of free cash flow returned via dividends and buybacks, further supported by prudent debt management.

Analyst consensus is bullish, with 38 buy ratings and 20 holds, no sell ratings, and a median price target of $337.50—about 6% above current prices—indicating upside potential in the medium term. The absence of sell or strong sell calls underscores confidence in McDonald’s stable cash flows and growth trajectory.

Intrinsic Value and Long-Term Potential

The substantial gap between the intrinsic DCF value ($467.72) and current price (~$318) suggests McDonald’s has a considerable margin of safety for long-term investors. The consistent free cash flow generation and dividend yield, combined with expansion plans and resilient business model, position McDonald’s as a durable holding through economic cycles. The stable franchise-based model reduces operating risk, while continued digital and menu innovation offers incremental growth avenues.

Long-term investors may view MCD as a core portfolio holding, benefiting from steady income and moderate capital appreciation.

Overall Evaluation

McDonald’s exhibits strong fundamental underpinnings, steady technical structure, and positive market sentiment, supported by strategic growth initiatives and effective capital return policies. Near-term price action may show limited volatility ahead of earnings, but medium- to long-term prospects remain promising, given intrinsic value and analyst targets.

Categorizing McDonald’s stock as a Buy candidate aligns with its robust fundamentals, favorable earnings outlook, resilient business model, and technical indications of strength. The combination of undervalued intrinsic worth and ongoing expansion supports this classification.