McDonald's Corporation: Assessing Long-Term Growth Through Earnings Momentum and Valuation Metrics

McDonald's Corporation (MCD) continues to demonstrate robust financial performance, with earnings momentum and valuation metrics suggesting strong long-term growth potential. As of Q2 2025, the company's earnings per share (EPS) surged 12.14% year-over-year to $3.14, while sequential growth reached 20.77% compared to Q1 2025 Mcdonald S (MCD) Earnings Report, Financial Results, Financial …^[3]. This acceleration in earnings aligns with broader operational resilience, as trailing twelve months (TTM) EPS grew 12.1% year-over-year to $11.73 in 2025 MCD 2025 Earnings & EPS History - Quarterly & Annual Growth^[1].

Revenue and net income also reflect this momentum. Second-quarter revenue rose 5.44% year-on-year to $6.843 billion, with net income climbing 11.42% to $2.253 billion compared to the same period in 2024 Mcdonald S (MCD) Earnings Report, Financial Results, Financial …^[3]. These figures underscore McDonald's ability to balance top-line growth with cost management, a critical factor in sustaining profitability amid macroeconomic headwinds.

From a valuation perspective, McDonald's current price-to-earnings (P/E) ratio of 26.37 as of September 5, 2025, appears reasonable when compared to its five-year average of 27.39 McDonald's PE Ratio 2010-2025 | MCD - Macrotrends^[2]. While the stock trades slightly below its historical norm, this discount may reflect market skepticism about sustaining high-growth rates. However, recent outperformance—such as the August 2025 EPS of $3.19, which beat analyst estimates by $0.04—suggests the company is exceeding expectations Mcdonald S (MCD) Earnings Report, Financial Results, Financial …^[3]. This momentum could justify a re-rating if earnings growth continues to outpace historical trends.

Historical data on MCD's earnings beats provides further context. Over the past three years, 14 quarterly earnings releases exceeded consensus estimates, with an average cumulative excess return of +0.72% in the first three trading days post-announcement. However, this edge faded quickly: by day 18, the average excess return fell below the S&P 500 benchmark, and the win rate for these events dropped below 50% after day 24 Mcdonald S (MCD) Earnings Report, Financial Results, Financial …^[3]. These findings highlight the short-lived nature of earnings-driven momentum, suggesting that while positive surprises generate initial optimism, they rarely sustain long-term outperformance without continued operational execution.

The interplay between valuation and earnings momentum is key to understanding McDonald's long-term appeal. A P/E ratio near historical averages implies that investors are paying in line with past performance, but the 20.7% quarterly EPS growth rate MCD 2025 Earnings & EPS History - Quarterly & Annual Growth^[1] indicates significant upside potential. For context, if the company maintains its Q2 2025 growth trajectory, TTM EPS could surpass $12.50 by mid-2026, potentially pushing the P/E ratio higher as earnings expand.

Critically, McDonald's valuation remains anchored to its operational strengths. The company's global footprint, digital innovation, and franchise model provide durable cash flow streams, which are less sensitive to short-term economic cycles. As noted by financial analysts, these structural advantages position McDonald's to outperform peers in both growth and stability Mcdonald S (MCD) Earnings Report, Financial Results, Financial …^[3].

In conclusion, McDonald's Corporation presents a compelling case for long-term investors. Its earnings momentum, driven by sequential growth and revenue resilience, is supported by a valuation that appears aligned with historical norms. While the P/E ratio offers no dramatic discount, the company's ability to consistently exceed expectations—such as the recent EPS beat—suggests that its growth trajectory could justify a premium over time. For investors seeking a balance of income and appreciation, McDonald's remains a cornerstone of the fast-food sector's value proposition.