With Sales Climbing, Is Now the Time to Buy McDonald's Stock?

There is a famous quote in the movie The Princess Bride where the character Vizzini says to the Man in Black: "You fell victim to one of the classic blunders! The most famous of which is, 'Never get involved in a land war in Asia,' but only slightly less well-known is this: 'Never go in against a Sicilian when death is on the line!'" Well, you can add never get into a price war with McDonald's (NYSE: MCD) to that list of classic blunders.

The fast-food giant proved this once again when it reported its fourth-quarter earnings results, as the company thrives when the environment shifts to value and becomes more promotional.

Same-store sales jump

McDonald's Q4 revenue jumped 10%, or 6% in constant currencies, to $7 billion, topping the $6.84 billion consensus, as compiled by LSEG. Adjusted earnings per share (EPS) rose 8% to $3.12, coming in ahead of analyst EPS estimates of $3.05.

The company's global same-store sales climbed by 5.7% in the quarter, which was well ahead of analyst projections of 3.9% growth, based on StreetAccount estimates. Comparable-restaurant sales were particularly strong in the U.S., climbing 6.8%. International company-operated same-store sales, meanwhile, rose 5.2%, while licensed markets' comparable-store sales increased by 4.5%.

McDonald's U.S. sales were powered by its Grinch Meal and Monopoly promotions, as well as its value offerings. Its Grinch Meal, which offered socks of the iconic Christmas cartoon character, was a huge hit, with the company selling more than 50 million pairs of Grinch socks in the first few days of the promotion. Meanwhile, the relaunch of its Extra Value Meals and introduction of its McValue platform earlier this year, featuring $5 meal deals, resonated with consumers.

Looking ahead, the company said 2026 was off to a good start, although Q1 same-store sales will be lower than the robust growth it saw in Q4. Some of this is due to the bad January weather that many parts of the country experienced.

Meanwhile, it plans to open approximately 2,600 restaurants in 2026, with 750 of them in the U.S. and international operated segments. It's also looking to add 1,800 new licensed locations, including 1,000 in China. Overall, it's looking for its unit count to grow by 4.5%.

Image source: Getty Images.

Is the stock a buy?

In a value and promotional environment, it's tough to top McDonald's. The company's value and promotional strategies are working, powering growth. Meanwhile, it plans to lean into innovative beverage items to help drive sales, as well as increase its chicken offerings.

From a valuation perspective, McDonald's trades at a forward price-to-earnings (P/E) of just under 25 times 2025 analyst estimates, which is around its recent historical average. Given that this is the type of environment where McDonald's shines, investors should feel comfortable buying the blue chip stock here.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool recommends London Stock Exchange Group Plc. The Motley Fool has a disclosure policy.