Using an unlevered Free Cash Flow to Firm (FCFF) model, we project McDonald's Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.8% to 4.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 33, DPO 35, DIO 2). At a 7.8% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $365.00 per share, suggesting MCD is undervalued by 17.6% at the current price of $310.37.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 11,809 | 12,484 | 13,056 | 13,618 | 14,210 | 14,565 |
| (−) Net Interest | 1,570 | 1,660 | 1,736 | 1,811 | 1,890 | 1,937 |
| (+) D&A | 2,487 | 2,647 | 2,868 | 3,024 | 3,124 | 3,202 |
| EBITDA | 15,866 | 16,792 | 17,660 | 18,454 | 19,223 | 19,704 |
| (−) Tax | 2,358 | 2,493 | 2,607 | 2,719 | 2,837 | — |
| (−) CapEx | 2,839 | 3,002 | 3,139 | 3,275 | 3,417 | — |
| (−) ΔWC | 89 | 84 | 71 | 70 | 73 | — |
| Free Cash Flow (FCF) | 10,580 | 11,213 | 11,843 | 12,390 | 12,896 | — |
| Peers' EBITDA Multiple | 19.7x | |||||
| Terminal Value | 387,772 | |||||
| WACC / Discount Rate | 7.77% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 10,191 | 10,023 | 9,822 | 9,535 | 9,209 | 266,743 |
| Enterprise Value | 315,523 | |||||
| Projection Period | 48,780 | 15.5% | ||||
| Terminal Value | 266,743 | 84.5% | ||||
| (−) Current Net Debt | 54,040 | |||||
| Equity Value | 261,483 | |||||
| (÷) Outstanding Shares | 716M | |||||
| Fair Price | $365 | +17.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.7x | 17.7x | 19.7x | 21.7x | 23.7x |
|---|---|---|---|---|---|
| 5.8% | $322 | $363 | $405 | $446 | $488 |
| 6.8% | $305 | $345 | $384 | $424 | $464 |
| 7.8% | $289 | $327 | $365 | $403 | $441 |
| 8.8% | $274 | $311 | $347 | $383 | $419 |
| 9.8% | $260 | $295 | $329 | $364 | $398 |
Current price: $310.37. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.