Stock Analysis | Mcdonald's Outlook - Bearish Technicals and Mixed Analyst Expectations

1. Market Snapshot

Takeaway: McDonald's stock is underperforming on the technical side with an internal diagnostic score of 1.0 and is currently experiencing a price rise of 1.57%, despite the weak chart signals.

2. News Highlights

Recent news shows mixed signals for the hospitality and restaurant sector. While some developments are positive, such as DoorDash's $200,000 in grants to restaurants affected by wildfires, other headlines raise concerns about rising costs. For example, new tariffs on Canada, Mexico, and China could drive up expenses for commodities like beer and vegetables, impacting the entire sector—including McDonald's. Meanwhile, Hyatt and InterContinental Hotels are expanding their global presence, adding to the competitive backdrop.

3. Analyst Views & Fundamentals

Analysts are divided, with a simple average rating of 3.78 and a performance-weighted average of 3.01. This indicates some divergence in expectations, with five “Buy” ratings and three “Neutral” calls over the past 20 days.

• ROA (Return on Assets): 4.15% – Internal score: 3.0
• Net profit margin (NPM): 32.92% – Internal score: 3.0
• Net income to revenue: 0.57% – Internal score: 0.0
• Operating profit growth (YoY): 31.18% – Internal score: 3.0
• Cash flow from operations growth (YoY): 850.70% – Internal score: 2.0
• Long-term debt to working capital ratio: 44.53% – Internal score: 3.0
• Cash-up (liquidity): -4.05% – Internal score: 0.0
• Cash to market cap ratio: -42.17% – Internal score: 0.0

The fundamentals show strong cash flow growth and a healthy margin, but liquidity and debt metrics remain weak. These fundamentals are not aligned with the bearish technical signals, highlighting conflicting signals for the stock.

4. Money-Flow Trends

Big-money players are currently in a negative trend, with large and extra-large investors showing outflows. Retail investors, however, are slightly positive, with a Small_trend of “positive.” The fund flow score is 7.82, which is considered “good,” but the overall flow remains negative at -49.0%. This divergence suggests retail buying is not enough to offset institutional selling pressure.

5. Key Technical Signals

The technical picture is dire, with an internal diagnostic score of 1.0. The Williams %R indicator has been in an overbought condition for five consecutive days, receiving a score of 1.0—a strong bearish signal. Over the last 56 historical instances of this signal, the average return was -0.72% with a 35.71% win rate. This shows a high probability of downward movement.

• Williams %R overbought: Seen on 2025-08-22, 2025-08-21, 2025-08-25, 2025-08-18, 2025-08-20

With 1 bearish indicator and 0 bullish indicators, the recent technical signals are weak and suggest caution. The market has been relatively calm, but the overbought condition in a bearish indicator raises red flags.

6. Conclusion

McDonald’s is showing promising fundamentals, particularly in operating profit and cash flow growth, but the technical and institutional outlook is bearish. With a fund flow score of 7.82 and a technical score of 1.0, the stock is not currently in a favorable position for aggressive entry.

Consider waiting for a pull-back or a clear reversal in key indicators before making a move. Investors may want to monitor future earnings reports and any potential changes in trade policy, which could significantly impact the sector.