Assignment Problem: McDonalds: Consider the following data for McDonalds (stock code: MCD) and two competitors:
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McDonalds (MCD)
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Wendys Co (WEN)
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Dunkin Brands Group (DNKN)
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Yum! Brands (YUM)
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Share Price (US$)
|
157
|
15.15
|
52.21
|
77.13
|
|
P/E
|
25.66
|
40.15
|
22.82
|
36.9
|
|
Market Cap.
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127.17B
|
3.69B
|
4.71B
|
26.59B
|
|
Employees
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375,000
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12,100
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1,163
|
90,000
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|
Revenue
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24.622B
|
1.435B
|
0.82889B
|
6.366B
|
|
Gross Margin
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41.45%
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48.12%
|
83.71%
|
62.65%
|
|
Operating Margin
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31.45%
|
21.93%
|
50.03%
|
25.53%
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|
EBITDA
|
9.311B
|
0.39B
|
0.44B
|
1.814B
|
|
Net Income
|
4.687B
|
129.63M
|
195.58M
|
994.00M
|
|
EPS
|
6.12
|
0.38
|
2.29
|
2.09
|
|
ROA
|
15.52%
|
4.11%
|
8.11%
|
15.77%
|
|
Current Ratio
|
1.4
|
1.97
|
1.43
|
1.16
|
Question 1: Give one reason why Yum! Brands, which includes Pizza Hut, is good peer comparison for McDonalds.
Question 2: Give one reason Dunkin Brands, is NOT an appropriate peer comparison for McDonalds.
Question 3: Explain why Wendys Co, is a suitable peer comparison for McDonalds.
Question 4: In financial statement analysis, it is important to consider special situations or context that may affect your analysis. Give two reasons for the information provided or from your general knowledge that may affect your decision to invest in McDonalds.
Question 5: You are considering the investment in McDonalds of the above fast-food companies. Choose one of the fast food companies as a peer. What would be your price target and recommendation for McDonalds? Show your calculations and round to nearest cent?
Question 6: Give two reasons from the information provided that would support your above recommendation for McDonalds.