McDonald’s (MCD) – A Case Study in Company Risk

In 1990, McDonald’s was a “safe” company. Today it is very risky:

12/31/1990 12/31/2005 12/21/2018
5 Year Revenue Growth 80% 34% -24%
5 Year Debt Growth as % of 5 Year Revenue Growth 159% 55% -415%
Debt to Revenues 98% 77.6% 192.6%
Price to Sales Ratio 1.58 2.22 6.38
PE Ratio 13.0 16.3 26.0
Dividends as % of Net Income 16.6% 0.0% 60.8%
Interest Exp. As % of Net Income 0.0% 0.0% 18.4%
Dividends & Interest as % of Net Income 16.6% 0.0% 79.2%
Profit Margin 12.1% 13.6% 24.6%
Date Revenues Liabilities Market Cap Dividends (TTM) Net Income Interest Expense (TTM) Shares Outstanding PE Ratio
12/31/1990 $6,640 $6,485 $10,459 $133 $802 $0 1,436.4 13.0
12/31/1995 $9,795 $6,889 $31,421 $227 $1,427 $0 1,399.4 22.0
12/31/2000 $14,243 $12,479 $44,584 $0 $1,977 $0 1,304.9 22.5
12/31/2005 $19,117 $14,843 $42,439 $0 $2,602 $0 1,263.2 16.3
12/31/2010 $24,075 $17,341 $80,874 $2,408 $4,946 $431 1,053.6 16.4
12/31/2015 $25,413 $30,851 $107,129 $3,230 $4,529 $629 906.8 23.7
12/21/2018 $21,202 $40,846 $135,256 $3,165 $5,208 $957 770.9 26.0
Date Debt to Revenue Price to Sales Interest Exp. as % of Net Income Interest Exp. as % of Revenue Dividends as % of Net Income Dividends as % of Revenue Dividends + Interest Exp. as % of Net Income Dividends + Interest Exp. as % of Revenue Net Income as % of Revenue
12/31/1990 97.7% 1.58 0.0% 0.0% 16.6% 2.0% 16.6% 2.0% 12.1%
12/31/1995 70.3% 3.21 0.0% 0.0% 15.9% 2.3% 15.9% 2.3% 14.6%
12/31/2000 87.6% 3.13 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 13.9%
12/31/2005 77.6% 2.22 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 13.6%
12/31/2010 72.0% 3.36 8.7% 1.8% 48.7% 10.0% 57.4% 11.8% 20.5%
12/31/2015 121.4% 4.22 13.9% 2.5% 71.3% 12.7% 85.2% 15.2% 17.8%
12/21/2018 192.6% 6.38 18.4% 4.5% 60.8% 14.9% 79.2% 19.4% 24.6%
Date 5Y Revenue Growth
5Y Liabilities Growth
3Y Increase in Liabs as % of Dividends Paid 3Y Increase in Liabs as % of Divs + Buybacks
12/31/1990 79.7% 127.0%
12/31/1995 47.5% 6.2%
12/31/2000 45.4% 81.2%
12/31/2005 34.2% 18.9% 1.66
12/31/2010 25.9% 16.8% 0.50 0.20
12/31/2015 5.6% 77.9% 1.13 0.52
12/21/2018 -24.2% 100.4% 1.74 0.52
By |2018-12-21T22:55:11+00:00December 21st, 2018|Measures of Risk|