MCD stock report (Essay Sample)
Targeted company: McDonalds
Roughly 5-8 pages – stock report.
• Presentation of the company: industry, business model, current projects,
leadership, history, peers…
• Fundamentals of the company: past performance, revenue, earnings (how
have they done over the years), financial ratios.
• Price and price expectation: Cash Flow analysis and intrinsic value of the
company to get one value at the for the share price
• But: Also provide a high and low estimate based on changes to your assumptions
• Risks and headwinds: under circumstances will you overestimate your
stock price / value
• At the end: conclusion & recommendation for three investors (investors of targeted company)!
MCD Stock Report
Table of Contents TOC \o "1-3" \h \z \u Presentation of the Company PAGEREF _Toc44261452 \h 2History PAGEREF _Toc44261453 \h 2Leadership PAGEREF _Toc44261454 \h 3Current Projects PAGEREF _Toc44261455 \h 4Industry PAGEREF _Toc44261456 \h 5Business Model PAGEREF _Toc44261457 \h 5Fundamentals of the Company PAGEREF _Toc44261458 \h 7Past Performance, Revenue, and Earnings PAGEREF _Toc44261459 \h 7Financial Ratios and Peer Analysis PAGEREF _Toc44261460 \h 8Price and Price Expectation PAGEREF _Toc44261461 \h 9Cash Flow Analysis PAGEREF _Toc44261462 \h 10MCD Intrinsic Value on Cash Flow PAGEREF _Toc44261463 \h 11DCF Analysis PAGEREF _Toc44261464 \h 13Risks and headwinds PAGEREF _Toc44261465 \h 14Conclusion and Recommendations PAGEREF _Toc44261466 \h 14
MCD Stock Report
Organizations issue stock reports annually to various investment segments, focusing on the larger areas of a specific financial sector. Stock reports ensure that investors have essential information on the overall performance, specifically stock and individual performances. One of the most successful corporations in the food industry is McDonald Inc., which initially was a US company, and was later internationalized. The firm is well known for its products, such as fries and burgers that sell through their restaurants globally. The primary operations are in the US, Asia, Africa, and Europe. For the last couple of years, stock reports have shown how well the company is doing in the competitive industry. Fundamentals and presentation of the firm, price expectations, and estimates of the future and present stock value are factors that have helped the company and investors take control of the food industry, locally and internationally.
Presentation of the Company
As one of the leading food corporations globally, McDonald’s entails a lot of hard work and investments overly. McDonald's corporation has been presented quite well, which has made it a common household name. The history, leadership, current projects, industry, and the business model are some of the things the firm has used as a representation in the food industry.
The company has the root of the McDonalds family, formerly from New Hampshire. The company was started by Maurice and Richard, in 1948 in California, USA (Shabbir, 2018). The firm is one of the biggest in the world, with its headquarters in Illinois. After the movie industry failed, the two siblings ventured into the restaurant business, proving to be successful. The two siblings streamlined operations by introducing the Speedee Service System that featured the fifteen cents Bamberger. The success of the process resulted in the franchising of the concept to become restaurants.
The original McDonald focused on milkshake, burgers, and fries that sold half the price due to the high competition. With continued growth, the company relied more on the workers, such as the waiters, and later installed self-service counters. The brothers were attracted to the kitchen appliances sold by a salesman Ray Kroc, who later franchised for the restaurants. According to Gilbert (2009), by the 1950s, Kroc had formed the McDonald corporation and opened the first restaurant in Illinois. The fact that Richard and Maurice developed the first restaurant and the food services model is Kroc, who founded the world's known McDonald's today by taking the business to other locations and markets. In the general sense, the corporation lacks modern history as the first decades a lot was done in establishing a brand and business model. The current history of the firm is notable primarily for the relatively few things of note. McDonald Inc. has continued with the rapid growth process for nearly seventy years since it was established. New restaurants opened in new markets and gained loyal and lost customers worldwide.
Good leadership is essential for any organization as it brings in valuable assets that ensure the firm improves on revenue and growth. The leadership team at McDonald's is headed by the president, who is also the chief executive officer (CEO). Before the current president, Chris Kempczinski, the leadership team was led by Steve Eastbrook until 2015 when he stepped down ("Leadership," n.d.). Chris Kempczinski is accountable for commercial procedures of about 14,000 McDonald’s cafeterias in the US. Chris joined the company in 2015 as an executive vice president, where he was overseeing global strategies, innovation, and development. As the president, Chris is aided by several senior and executive vice presidents, each supervising a specific section of the corporation. McDonald's culture is classified as divisional according to location. Each division has finance, marketing, and IT departments. The company believes in hiring individuals who can succeed in the current leadership to advance their career progression. People are the most valuable resource at McDonald’s, making the company invest in leadership as competition across the globe strikes throughout.
Having a competitive advantage in the most competitive industry requires strategies that outlive the rivals. At McDonald's, a lot of resources are spent in production, promotions, and remodeling. The company has made significant progress in redesigning future restaurants all over the world. According to McDonald’s, the firm is selecting and showcasing farmers to work with their nobles and share processes and practices ("Progress and Performance," n.d.). These flagship programs aim to provide capital and tools that prepare farmers as well as industry influencers.
As the world changes and new technologies are emerging, complex problems are also arising with demanding innovative solutions. As a result, McDonald is developing projects and establishing collaborations with consumers, employees, and all stakeholders to handle social and environmental challenges. Such initiatives are driving change and becoming future standards for upcoming corporations. The company has also established projects that are helping the current generation by the provision of healthy products such as fruits and vegetables. More so, the youth is benefiting from the firm’s projects through employment opportunities, training, and educational scholarships, in a project to hold the community.
Over the years, the fast-food industry has been highly competitive, and customers make purchases based on convenience and price. The company's main competitors include Taco Bell, Burger King, and Wendy’s. The business has several strengths and opportunities that ensure a competitive advantage for the firm. According to Bonnici and Galea (2015), the US market leadership is an immense strength taking into account how popular fast food is in the country. The company invests mu h on brand awareness and value as a success factor, especially when results indicate high customer loyalty. Moreover, McDonald's enjoy high profits from franchises with outstanding economic growth.
However, even though the company offers a wide range of fast food products, many of the items are considered unhealthy, which is a significant weakness. Media coverage and the increasing consumer awareness of fast food's negative impacts pose a significant setback for the company (Bonnici & Galea, 2015). Additionally, high employee turnover is a crucial issue in the firm as there is a struggle for employee satisfaction compared to rivals. The industry of fast food is extremely competitive, and the firm must absorb the pressure and reduce pushing the loss margin to consumers to have a competitive position.
There is a sustainable business model for a long-term perspective at McDonald’s. As the world’s fastest leading facility cafeteria brand, suppliers, employees, and franchisees work together towards a common objective. The firm's primary focus is the burger production in the face of growing customer demand. Suppliers are devoted to offering quality and security, while franchisees bring the spirit of entrepreneurship and commitment to society ("Our Business Model," n.d.). The firm is dedicated to creating an optimistic influence on the community by providing quality goods and services and offering opportunities to support the people.
Fundamentals of the Company
McDonald’s Corp. operates in several countries in the franchising of restaurants. The past performances, revenue, earnings, and financial ratios are some of the firm’s fundamentals.
Past Performance, Revenue, and Earnings
Over the last couple of years, the company has been exemplary, with more sales and revenue achieved at the peak. Nevertheless, in the previous three years, revenue has declined for various reasons, such as strategic franchising. Profits have fluctuated over the last five quarters. As of 2019 financial year, the company recorded an overall revenue of about $21.1 billion and earnings of about $7.88, which was a growth from the preceding year ("McDonald's Reports Fourth Quarter and Full Year 2019 Results and Quarterly Cash Dividend", 2020). Factors such as technological initiatives resulted in changes in performance, with most consumers ordering products and paying for them through the system. Employees are used to creating the overall picture of the company, and this has led to increasing revenue over the years.
The growth velocity plan launched by the firm years ago has been doing good in the market in terms of delivery and quality services. Currently, the firm is determined to localize the menus and invest in marketing strategies. As a result of the...
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