Dutch Bros and McDonald's Hit 52-Week Lows on the Same Day. Here's Why Only One Is a Buy Now.

On Sept. 17, two popular restaurant stocks hit new 52-week lows.

The first was McDonald's (NYSE: MCD). Ironically, this is the same day management announced its 50th consecutive annual dividend raise, cementing the company's place among a group of stocks called Dividend Kings because of their consistency in increasing the dividends they pay.

The second was Dutch Bros (NYSE: BROS). Caught in a downward spiral since August, shares in the relatively young coffee chain have continued tumbling in recent trading. Sharing the same industry, yet differing in a myriad of ways, you may be wondering which one is a "buy the dip" opportunity and which is best avoided. Let's see if an answer presents itself.

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McDonald's: why Wall Street isn't loving it

So far this year, we've heard plenty of so-called "also-ran" fast-food chains like Wendy's struggling, but even McDonald's, the largest fast-food chain in the world, hasn't been getting much love from investors. Year-to-date, its shares have fallen by 18.3%, with the share price continuing to trend lower.

Last month's quarterly earnings release may have contained many signs of turnaround progress, but skepticism runs high about whether the company is actually getting anywhere with its sweeping operational changes (it's in a slump stateside with same-store sales growth of just 0.8%). The changes have included a revamp of its value menu and the launch of new premium product offerings. After earnings, McDonald's even appointed a new head of U.S. operations, Skye Anderson, as part of its efforts to further enhance turnaround plan execution.

Ahead of an Investor Day on Sept. 23, McDonald's management keeps conveying to investors plans to implement further initiatives to boost weak U.S. same-store sales, including further value offerings, as well as a strategy to combat the impact of GLP-1 weight loss drugs on demand.

Dutch Bros remains priced for high growth

Year-to-date, Dutch Bros shares have fallen by nearly 35%. Yet while the stock has experienced a steeper slide, don't assume it's the cheaper of the two. In fact, a rich valuation may be the key underlying issue with this one-time highflier among fast food stocks. Even after its big drop, Dutch Bros stock trades for around 34 times forward earnings.

Still trading at the higher end of the valuation range among restaurant stocks, it may not take much to drive a further de-rating. Any sign of a sales slowdown could call into question Dutch Bros' premium valuation. If evidence emerges that increased operating costs will impact margins, it could, in turn, lead investors to bid the stock down to new 52-week lows.

What's the better buy: McDonald's or Dutch Bros?

Trading at just under 18 times forward earnings, McDonald's arguably isn't that cheap, given its current growth issues. That said, as overseas same-store sales and expansion remain relatively stronger, analyst forecasts call for steady earnings growth of 6% and 8.1%, respectively, during 2026 and 2027.

That's not all. Take into account the value of McDonald's owned real estate. On the books for around $30.4 billion, analysts at MacQuarie have previously argued that the market value of this land and building portfolio could exceed $120 billion, representing a large percentage of the company's $175.8 billion market cap.

Perhaps serving as a valuation floor, and maybe even a catalyst, if McDonald's ever attempts to launch its own real estate investment trust (REIT), the risk/reward proposition appears stronger with slower-growing McDonald's than with faster-growing but richly priced Dutch Bros.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Dutch Bros. 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.