McDonald's Stock Opportunities: High Return Trends

When looking for a stock with long-term gain potential, two key elements are important: increasing return on capital employed (ROCE) and the expansion in the amount of capital used by the company. McDonald's (NYSE: MCD) is showing impressive performance in these areas.

The ROCE calculated for McDonald's measures the return generated from the capital used in the company's operations. This calculation is performed as follows:

ROCE = Earnings Before Interest and Taxes (EBIT) ÷ (Total Assets - Current Liabilities)

According to the calculation, the ROCE ratio for McDonald's is found to be 22%. This ratio is significantly higher than the average 11% return for companies operating in similar sectors.

Over the past five years, McDonald's has seen a substantial increase in capital returns, reaching 22%. The amount of capital used by the company has also increased by 23%. This situation indicates that McDonald's has the opportunity to reinvest its profits at high rates.

In short, McDonald's is proving its ability to reinvest in its business, generating high returns, which is extremely attractive for investors. Additionally, the stock has provided a 61% return to investors over the past five years. However, it is believed that the current strong fundamentals warrant a deeper examination of the company.

There are also potential risks associated with McDonald's; in this context, a warning sign has been identified that should be noted.

Since high returns are a critical component of strong performance, we recommend examining high-yield stocks with a solid financial position.