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Featured News from MarketBeat
McDonald's Is the Cheapest It’s Been in Years—Does That Make It a Buy?Authored by Sam Quirke. First Published: 5/15/2026. 
Key Points
- McDonald’s is trading at its lowest valuation and share price levels in nearly two years despite continuing to deliver impressive financial results.
- The stock’s RSI has fallen to deeply oversold territory, and to the same level that has marked major lows in the past.
- Analysts are overwhelmingly bullish on the company’s ability to navigate current headwinds and return the stock to its highs.
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After a rough couple of months, shares of fast food giant McDonald’s Corporation (NYSE: MCD) are quietly becoming one of the more interesting contrarian setups in the market. On the surface, however, it might be hard to spot. The stock is now trading at the same levels it was in 2022; its price-to-earnings (P/E) ratio has compressed to its lowest level in nearly two years; and, technically speaking, its shares are oversold. That’s a remarkable position for a company that has been delivering record revenue and record earnings per share in recent quarters. Even more interestingly, McDonald’s relative strength index (RSI) fell to 25 in mid-May, an extreme reading that has historically coincided with a low in the stock.
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Investors are clearly worried about slowing consumer spending, weaker traffic trends, and mounting pressure across the broader restaurant sector. The question now is whether the market has overreacted to McDonald’s specifically and, in doing so, created a compelling long-term buying opportunity. Why McDonald’s Has Fallen So HardThough the stock was setting record highs as recently as February, several factors help explain why it has since fallen as much as 20%. The broader consumer environment, for example, has become more difficult, particularly for lower-income families, a key target market for McDonald’s. As oil prices have risen since early March, consumers are feeling the pressure of some of the highest inflation readings in years and are spending less. Fast food companies across the board are aware of this shift, and investors are increasingly worried that restaurant traffic could remain under pressure through the rest of the year. That concern has weighed heavily on McDonald’s shares. The market has also started questioning whether the company’s best growth years are already behind it, especially in a world where investors seem to care mainly about artificial intelligence (AI) or related tech stocks. McDonald’s is about as brick-and-mortar as they come, so perhaps it’s no surprise that the stock has been drifting lower while AI stocks have been surging. The Fundamentals Still Look Surprisingly StrongHowever, the selloff appears increasingly disconnected from the business's underlying fundamentals. That is what makes the setup so interesting. Despite the weak price action on the chart, McDonald’s continues to perform like one of the strongest consumer businesses in the world. The company generates substantial cash flow, maintains industry-leading operating margins, and benefits from one of the most powerful franchise models ever built. Its scale, pricing power, and global brand recognition remain almost impossible for competitors to match, let alone replicate. Importantly, management isn’t acting like the company is preparing for a long-term dip. As part of last week’s earnings report, the company reaffirmed plans to expand to roughly 50,000 restaurants globally by the end of 2027. That’s not exactly the kind of behavior you’d expect from a company anticipating structural weakness. If anything, it signals confidence in the company’s outlook and growth expectations. That confidence is also showing up financially. Even with slowing consumer conditions, McDonald’s is delivering record numbers for revenue and earnings per share on a trailing 12-month basis and is comfortably beating analyst expectations. Multiple Signals Suggest This Could Be the BottomThat hasn’t been enough to stop investors from selling the stock en masse in recent weeks, but it does mean the company’s valuation has been firmly reset. Based on a fresh P/E ratio of 23, McDonald’s is currently trading at one of its lowest valuation levels in nearly two years. Combined with the fact that the stock is back at 2022 levels, it’s hard not to think there may be an opportunity to buy one of the world’s strongest consumer franchises at a meaningful discount. This thesis is supported by the technical setup, with the depressed RSI suggesting the stock is in deeply oversold territory. What makes this all the more compelling is that the last time McDonald’s RSI was this low, it ultimately marked a long-term bottom for shares. The final piece of the puzzle from the bulls’ perspective is the recent analyst commentary, which is overwhelmingly bullish. This week alone has seen JPMorgan Chase reiterate its Overweight rating and $305 price target, while last week Evercore and BTIG did the same, with price targets of $350 and $370, respectively. Considering McDonald’s is currently trading at just $275, that implies about 35% in targeted upside—not bad for a stock that’s back at 2022 levels, is extremely oversold technically, and is still executing very well. Don’t be surprised if the market starts catching onto this opportunity quickly. |
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