McDonald's Sits 21% Below Its High and 4% Above Its 52-Week Low. The Dividend Yields 2.7%.

As of this writing, McDonald's (NYSE: MCD) stock sits at $270.64. The 52-week high is $341.75, so shares have given up about 21% -- and they now sit just 4% from the bottom of their yearly range. That's an unusual place to find one of the steadiest large businesses in the world, and to me, it's worth a look. At the current price, the stock offers a dividend yield of about 2.7%, and shares cost about 22 times earnings.

A decline like that usually means something went wrong. So, did the business change, or did just the price? The company's last four quarterly reports point one way.

Image source: Getty Images.

The business the stock left behind

McDonald's has now posted positive global comparable sales (growth at restaurants open more than a year, the industry's cleanest measure of underlying demand) in each of its last four reported quarters. The streak runs 3.8% in the second quarter of 2025, 3.6% in the third, 5.7% in the fourth, and 3.8% in the first quarter of 2026. The fourth quarter also came with positive guest counts globally, meaning more transactions, not just higher checks.

The U.S. business, which investors have fretted over as lower-income consumers pull back, grew comparable sales 6.8% in the fourth quarter and 3.9% in the first quarter of 2026. The international side kept pace. International operated markets grew comparable sales 3.9% in the first quarter, and the developmental licensed markets, where local partners run the restaurants, grew 3.4%.

Profits followed. First-quarter revenue rose 9% year over year to about $6.5 billion, and operating income climbed 12% to nearly $3 billion -- a 45% operating margin. Earnings per share came in at $2.78, up 7%.

The full year of 2025 told the same story. Revenue rose 4% to $26.9 billion, operating income rose 6%, and earnings per share climbed 5% to $11.95.

That operating margin is the heart of the investment case. Most of McDonald's revenue doesn't come from selling burgers. Of that $26.9 billion in revenue, $16.5 billion came from its franchised restaurants -- rent and royalties collected from operators who put up their own capital and carry the restaurant-level costs.

That structure is why operating margins can sit in the mid-40% range and why profits could hold up through a consumer soft patch.

The loyalty program adds another layer of durability. Members generated over $9 billion in systemwide sales in the first quarter alone, across 70 markets, and loyalty sales for the trailing 12 months topped $38 billion.

What the price pays for now

At $270.64, McDonald's costs about 22 times earnings, based on earnings per share of $12.13 over the past 12 months. When the stock traded at its high of $341.75, those same earnings would have cost about 28 times. And trailing earnings were lower back then, so investors were actually paying more than that. Earnings per share went up over the past year. Only the price went down.

Put another way, the entire 21% decline came from investors paying less per dollar of McDonald's earnings, not from McDonald's earning less. The company's market value has dropped by about $50 billion, to about $191 billion, while the business behind it kept growing.

The dividend helps, too. At $7.44 per share annually, the payout yields about 2.7% at the current price, the direct result of a falling price meeting a steady dividend.

Of course, the picture isn't spotless. Comparable sales growth decelerated from the fourth quarter's 5.7% to 3.8% in the first quarter, and more than half of the first quarter's reported revenue growth came from currency moves rather than underlying demand: On a constant-currency basis, revenue grew 4%, not 9%. If U.S. traffic weakens from here, the comparable sales streak could get tested. And a price-to-earnings ratio of 22 isn't cheap, either. It's a reasonable price for a business of this quality, not a deep discount.

For me, that adds up to a buy. Nobody should buy McDonald's expecting a growth stock. But a business growing comparable sales every quarter, earning mid-40% operating margins on a largely franchised model, and yielding 2.7% is the kind of thing I'd rather own closer to its 52-week low than its high. I'd watch guest counts and U.S. comparable sales from here, since those would show cracks first. But I think the price finally fits the business.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.