Can McDonald’s Sustain Its Bounce?
It hasn’t been a great year for McDonald’s ($MCD). The stock is down nearly 7% in 2026, despite the S&P 500’s 10% year-to-date gain. McDonald’s has declined by about 17% since reaching its all-time high of $341 in late February.
In the most recent quarter, U.S. same-store sales declined by 0.2%. However that figure was buttressed by higher check prices. Compared to the same period last year, foot traffic at the fast-food giant declined by 4.6% in the recently ended quarter.
However, same-store sales turned positive during the last month of that quarter. That key figure turned positive in September, and the stock has been in rally mode ever since. Is a turnaround underway?
Where McDonald’s Went Wrong
In a recent conference call, CEO Chris Kempczinski noted the effects of inflation on low- and middle-income consumers, which make up a significant portion of McDonald’s clientele.
However, he also blamed the company itself for some unforced errors. Overlapping marketing promotions and new product introductions led to confusion at the kiosk and gridlock in the kitchen, slowing McDonald’s normally speedy service.
Taking Responsibility
It’s a positive when a company owns its mistakes, because it implies that actions can be taken to improve results in the future. Those actions are already in motion.
Recently, McDonald’s implemented a program called NEXT, designed to increase foot traffic by improving efficiency. The plan was unveiled in June, and implementation began in early October.
Since early October, shares of McDonald’s have gained just over 20%. The stock reached a three-month high on Monday.
Even after its recent rally, the restaurant chain has a dividend yield of 2.74%. The stock is scheduled to trade ex-dividend on December 1, with a payment date of December 15.
To the Chart
On Monday, McDonald’s traded above its 200-day moving average (red) for the first time since April. Ultimately, the stock closed just below that key indicator.
The fast food king rallied after beating earnings estimates in the quarter ended in September. However, revenues came up short by about 1.75%.
Investors may want to avoid going all-in on the venerable fast food chain. First, the stock’s relative strength index (RSI) has been overbought since the start of November (arrow). Second, the stock has been consolidating after a 20% gain (shaded yellow).
Due to these concerns, we’re opening with a half-sized McDonald’s position, and will add accordingly.
Bottom Line
This company has the ability to perform well in any economic environment. It’s also a real estate kingpin, owning the land beneath most of its restaurants.
After a sharp price decline, McDonald’s shares are still well off their highs, but are beginning to rise. McDonald’s has raised its dividend consistently for the past 50 years, and has a current yield of 2.74%. We’re entering with a small sized long position, and will add if and when appropriate.
At the time of publication, Ponsi was long MCD.
