McDonald’s
Shares of McDonald’s Corp. (NYSE: MCD) have added nearly 10% to their price over the past 12 months, though growth for the first month of 2023 so far is just 4.3%. McDonald’s and other fast-food chains have been fighting a 2024 California law that could raise hourly wages at company and franchisee stores to $22 an hour. The law known as AB257, or the FAST Act, was signed on Labor Day and was set to be enforced beginning January 1. A last-minute lawsuit was filed on December 29 that sought and received a hold on enforcement until an effort to get a referendum on the 2024 ballot is completed.
In Delaware Chancery Court this week, a decision allowing shareholders to sue a former McDonald’s executive was approved. The case sets a precedent that makes company officers, not just directors, responsible for oversight of corporate activities. The lawsuit centers on former chief people officer David Fairhurst, who breached his oversight responsibilities by allegedly acting in bad faith. Fairhurst and former CEO Steven Easterbrook were both fired in 2019 following allegations of sexual misconduct. Easterbrook repaid McDonald’s $105 million to settle the allegations and was dismissed from the lawsuit.
None of the legal overhangs is having much effect on analysts, who are solidly bullish on the stock. Of 38 brokerages covering the company, 27 have a Buy or Strong Buy rating, while another 10 rate the shares at Hold. At a price of around $275.00 a share, the upside potential based on a median price target of $296.00 is 7.6%. At the high price target of $328.00, the upside potential is about 19.3%.
Fourth-quarter revenue is forecast at $5.73 billion, down 2.4% sequentially and by 4.7% year over year. Adjusted EPS are pegged at $2.45, down 8.4% sequentially and 9.9% lower year over year. For the full 2022 fiscal year, consensus estimates call for EPS of $9.96, up 7.3%, on revenue of $23.02 billion, down about 0.9%.
McDonald’s stock trades at 27.6 times expected 2022 EPS, 25.9 times estimated 2023 earnings of $10.60 and 23.8 times estimated 2024 earnings of $11.55 per share. The stock’s 52-week range is $217.68 to $281.67. McDonald’s pays an annual dividend of $6.08 (yield of 2.21%). Total shareholder return over the past 12 months is 12.42%.
Pfizer
Drugmaker Pfizer Inc. (NYSE: PFE) has posted a share price dip of nearly 17% over the past 12 months and reached an all-time high in mid-December of 2021. Since that high was put up, the shares have dropped almost 25%.
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