Rating: HOLD
| Metric | Value |
|---|---|
| Current Price | $270 |
| Triangulated Fair Value | $228 |
| 12-mo Scenario PWEV | $263 |
| Implied Return | -16% |
| Forward P/E | 21.6x |
| Market Cap | $192B |
| 52-Week Range | $265 – $338 |
Methodology: Valuation triangulated across five independent anchors — Monte Carlo (Student-t + regime switching), an independent DCF, peer re-rating, a sum-of-parts, and a scenario-weighted PWEV. Figures reconciled to Alpha Vantage 2026-06-26. Each chart below sits with the part of the thesis it evidences.
Investment Thesis
The bull case — 'Bull — Premium Re-Rate' (8% weight) — targets $466, +72% vs spot. It needs the multiple to hold or expand.
The dashboard below is the whole argument on one page: spot ($270) against each valuation anchor, the scenario tree, technicals and the options-implied move.
Anti-Thesis (The Real Bear Case)
The structural case — 'Structural — Traffic Loss / GLP-1 / Saturation' (20%) — targets $116, -57% vs spot. This sits below the 52-week low — a genuine structural impairment, not a mild pullback.
Key Debate
P/E Multiple explains 82% of Monte Carlo outcome variance — i.e. value is set by the multiple the market will pay, a rate/sentiment regime bet as much as an earnings bet.
Earnings-Call Disconfirmation & Sentiment
Derived signals from the MCH market-data store (Alpha Vantage transcripts + news). Quantitative tone only — a disconfirmation flag, not a substitute for reading the call.
Management vs analyst tone (2026Q1): management +0.20 vs analyst floor +0.00 → delta +0.20 (n=41 mgmt / 14 Q&A; 14th pctile across the S&P book, z -1.1).
Flag: CANDID — management unusually candid/cautious vs peers (relatively low spin).
| Quarter | Mgmt | Analyst | Delta |
|---|---|---|---|
| 2026Q1 | +0.20 | +0.00 | +0.20 |
| 2025Q4 | +0.36 | +0.24 | +0.12 |
| 2025Q3 | +0.26 | +0.26 | -0.00 |
| 2025Q2 | +0.23 | +0.13 | +0.09 |
News (last 365d, 1000 articles): avg ticker sentiment +0.13 (bullish 11% / bearish 2%)
Scenario Analysis
The tree runs from a structural 'Structural — Traffic Loss / GLP-1 / Saturation' downside ($116) to a 'Bull — Premium Re-Rate' bull case ($466); the probability-weighted blend (PWEV $263) is -3% versus spot.
| Scenario | Probability | Target | Return |
|---|---|---|---|
| Structural — Traffic Loss / GLP-1 / Saturation | 20% | $116 | -57% |
| Consumer-Spending Recession | 17% | $197 | -27% |
| Base — Comps + Unit Growth | 35% | $273 | +1% |
| Growth — Digital / International Units | 20% | $369 | +36% |
| Bull — Premium Re-Rate | 8% | $466 | +72% |
| Probability-Weighted (PWEV) | — | $263 | -3% |
Scenario rationale — what each probability buys (the driver path behind every target):
- Structural — Traffic Loss / GLP-1 / Saturation (20%, $116). Structural impairment — traffic loss / GLP-1 / saturation: earnings AND the multiple compress together. Target sits below the 52-week low by construction. Drivers — implied_target: 115.87; probability: 0.2.
- Consumer-Spending Recession (17%, $197). Cyclical downturn — restaurant traffic + comps + unit growth vs labor/commodity costs (GLP-1 debate) weakens for 1–2 years before normalising. Drivers — implied_target: 196.77; probability: 0.17.
- Base — Comps + Unit Growth (35%, $273). Mid-cycle — normalised restaurant traffic + comps + unit growth vs labor/commodity costs (GLP-1 debate); disciplined capital allocation; steady returns. Drivers — implied_target: 273.29; probability: 0.35.
- Growth — Digital / International Units (20%, $369). Upside — digital + international unit growth lifts earnings above mid-cycle; the multiple expands modestly. Drivers — implied_target: 368.94; probability: 0.2.
- Bull — Premium Re-Rate (8%, $466). Upside tail — sustained tight conditions or a structural re-rate on digital + international unit growth. Drivers — implied_target: 465.96; probability: 0.08.
Valuation Triangulation
Five anchors — but read them with their basis in mind. The Monte Carlo, the DCF terminal, and the peer re-rate all key off a market multiple, so they are not fully independent; only the discounted cash flows themselves are genuinely multiple-free. The discipline is to read the spread and weight the cash-based view, not to treat five numbers as five independent votes.
| Method | Basis | Fair Value | vs Spot |
|---|---|---|---|
| Monte Carlo median (Student-t + regime) | multiple | $239 | -12% |
| Peer P/E re-rate | multiple | $320 | +18% |
| Peer EV/Revenue re-rate | multiple | $66 | -76% |
| Scenario PWEV | multiple | $263 | -3% |
| DCF (5-year + terminal) | cash flow + terminal × | $173 | -36% |
| Triangulated (weighted) | — | $228 | -16% |
Rating vs blend — the key debate. The rating tracks the multiple-discipline fair value (Monte Carlo $239 + scenario PWEV $263, ≈ spot); the weighted blend $228 (-16%) sits below it because the cash-flow DCF ($173) is materially more conservative than the market multiple. Whether the current multiple is justified is the central question for this name — and the principal downside risk to the rating.
Monte Carlo — the distribution, not a point
10,000 paths, Student-t shocks (fat tails) with a regime-switching overlay. The median lands at $239 and 36% of paths finish above spot. The variance decomposition shows the p/e multiple is the dominant swing factor (82% of variance). Value is a multiple bet: fundamentals move the answer far less than the rating does.
DCF — the cash-flow anchor
Independent of the market multiple: a 5-year path, WACC 8.0%, 18x terminal FCF multiple → $173. This anchor is deliberately the heaviest (41%): it is the valuation least hostage to the current multiple regime.
Peer benchmarking — relative value
Against the peer cohort, re-rating to the peer-median forward multiple (P/E 25.485x) implies $320. A premium is only justified by superior growth/margins; otherwise it is multiple risk. Weighted just 12% so the market's mood does not drive the fair value.
Across all anchors the spread is wide (genuine disagreement — low valuation confidence).
Revenue-Segment Breakdown
The company-specific drivers behind the valuation — each segment carries its own growth, margin, multiple and capex intensity. (Tags: FACT reported · ESTIMATE from disclosures · INFERENCE judgment.)
| Segment | Revenue | Mix | Growth | Op margin | Multiple | Capex % | Tag |
|---|---|---|---|---|---|---|---|
| Restaurants (franchised / company) | $27.4B | 100% | 5% | 40% | 21x | 5% | ESTIMATE |
Named Exposures
Demand & pricing cycle (FACT/ESTIMATE)
| Dimension | Assessment |
|---|---|
| driver | restaurant traffic + comps + unit growth vs labor/commodity costs (GLP-1 debate) |
| net_debt_or_cash_b | -53.71 |
Capital intensity & shareholder returns (ESTIMATE)
| Dimension | Assessment |
|---|---|
| capex_pct_revenue | 0.05 |
| div_yield | 0.0265 |
Structural risk vs optionality (INFERENCE)
| Dimension | Assessment |
|---|---|
| downside | traffic loss / GLP-1 / saturation |
| upside | digital + international unit growth |
Industry Context — Consumer Discretionary — Restaurants
This name sits in the Consumer Discretionary — Restaurants as a restaurants. restaurant traffic + comps + unit growth vs labor/commodity costs (GLP-1 debate) Its scenarios are not guessed in isolation — they inherit a single, shared view of the cluster's driver cycle, so the names that depend on the same event are mutually consistent.
Value chain: MCD (restaurants) · SBUX (restaurants) · YUM (restaurants) · CMG (restaurants) · DRI (restaurants) · DPZ (restaurants)
| Shared state | Capex path | House view | This name implies |
|---|---|---|---|
| Traffic Recession — GLP-1 / Consumer Pullback | 37% | 37% | |
| Mid-Cycle — Comps + Unit Growth | 35% | 35% | |
| Upside — Digital / International Units | 28% | 28% |
On the cluster's key downside — Traffic Recession — GLP-1 / Consumer Pullback () — this name implies 37% vs the cluster house view of 37% (in line with the house). The cluster's full cross-stock reconciliation governs that the names which ride the same capex cycle assign it comparable odds.
Structure: Shared State — The disc_restaurants cycle is the shared macro driver. Driver — restaurant traffic + comps + unit growth vs labor/commodity costs Dispersion — Members differ by cyclicality (quality compounders vs deep cyclicals).
Model Appendix
DCF — line items
| Year | Revenue | Op income | − Capex | + D&A | FCF | PV(FCF) |
|---|---|---|---|---|---|---|
| FY+1 | $29B | $12B | $1B | $1B | $9B | $8B |
| FY+2 | $30B | $13B | $2B | $1B | $10B | $8B |
| FY+3 | $31B | $14B | $2B | $1B | $10B | $8B |
| FY+4 | $33B | $14B | $2B | $2B | $11B | $8B |
| FY+5 | $34B | $15B | $2B | $2B | $11B | $8B |
| Terminal | — | — | — | — | $11B × 18x | $136B |
FCF is bridged: NOPAT + D&A − Capex − ΔNWC (capex intensity 5% of revenue, weighted from the segments) — not a single conversion fudge.
WACC 8.0% · Σ PV(FCF) $41B + PV(terminal) $136B = EV $177B; + net cash → equity $123B ÷ diluted shares 0.71B = $173/share (exit-multiple terminal).
- Gordon (perpetuity-growth) terminal at 2.5% → $180/share — a genuinely non-multiple, cash-based cross-check; the exit-multiple and Gordon values bracket the terminal-value risk.
- Incremental ROIC on the forecast capex ≈ 27% vs WACC 8% → above WACC — the build is value-creative.
Peer set
| Peer | EV/Rev | Fwd P/E | Growth | Op margin |
|---|---|---|---|---|
| SBUX | 3.646x | 35.09x | 5% | 8% |
| YUM | 6.3x | 23.42x | 5% | 31% |
| CMG | 3.709x | 27.55x | 5% | 13% |
| DRI | 2.381x | 18.55x | 5% | 13% |
| Median | 3.6775x | 25.485x | — | — |
Peer-median fwd P/E → $320; EV/Rev → $66.
Weighted fair-value math
| Anchor | Value | Weight | Contribution |
|---|---|---|---|
| DCF | $173 | 41% | $71 |
| Scenario PWEV | $263 | 29% | $77 |
| Monte Carlo median | $239 | 18% | $42 |
| Peer P/E | $320 | 12% | $38 |
| Triangulated | — | 100% | $228 |
Sensitivity
DCF/share — WACC × terminal multiple
| WACC ＼ Term× | 12.6x | 15.3x | 18.0x | 20.7x | 23.4x |
|---|---|---|---|---|---|
| 6% | $132 | $163 | $195 | $226 | $258 |
| 7% | $123 | $153 | $183 | $214 | $244 |
| 8% | $115 | $144 | $173 | $201 | $230 |
| 9% | $108 | $135 | $163 | $190 | $217 |
| 10% | $101 | $127 | $153 | $179 | $205 |
DCF/share — revenue CAGR Δ × op-margin Δ
| CAGRΔ ＼ MgnΔ | -3.0pp | -1.5pp | +0.0pp | +1.5pp | +3.0pp |
|---|---|---|---|---|---|
| -3.0pp | $129 | $136 | $144 | $152 | $159 |
| -1.5pp | $142 | $150 | $158 | $166 | $174 |
| +0.0pp | $155 | $164 | $173 | $182 | $190 |
| +1.5pp | $170 | $179 | $188 | $198 | $207 |
| +3.0pp | $185 | $195 | $205 | $215 | $225 |
Tornado — DCF/share swing by driver (widest first)
| Driver | Low | High | Swing |
|---|---|---|---|
| Revenue CAGR ±3pp | $144 | $205 | $61 |
| Terminal × ±15% | $144 | $201 | $57 |
| Op margin ±3pp | $155 | $190 | $35 |
| WACC ±1pp | $163 | $183 | $21 |
| FCF conversion ±10% | $173 | $173 | $0 |
Company lever — SoP/share vs Restaurants (franchised / company) multiple (AI re-rating) (base 21x)
| Multiple | 14.7x | 17.8x | 21.0x | 24.1x | 27.3x |
|---|---|---|---|---|---|
| SoP/share | $491 | $610 | $734 | $853 | $977 |
Load-Bearing Assumptions
DCF: WACC 8%, terminal multiple 18×, FY+5 revenue $34B. Triangulation leans 41% on DCF, 29% on PWEV.
Reasons the Thesis Could Fail (Falsifiable)
The valuation is multiple-dependent (82% of variance); a de-rating toward the DCF anchor ($173) implies -36%.
Fact / Inference / Speculation
- FACT: Spot $270; 52-week range $265–$338; engine rating HOLD; base-case target $263 (-3%).
- INFERENCE: Triangulated FV $228 (-16%). P/E Multiple explains 82% of Monte Carlo outcome variance — i.e. value is set by the multiple the market will pay, a rate/sentiment regime bet as much as an earnings bet.
- SPECULATION: At current prices the embedded bet is that the multiple holds or expands — P/E Multiple carries 82% of outcome variance.
Recommendation: HOLD
Balanced: triangulated fair value $228 (-16% vs spot); the outcome hinges on P/E Multiple. The debate is P/E Multiple (82% of variance) — fundamentally a multiple/regime call. SBC runs —M TTM (disclosed in the appendix).