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Special Report
McDonald's Is the Cheapest It’s Been in Years—Does That Make It a Buy?Submitted by Sam Quirke. Originally 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 shaping up as one of the market’s more interesting contrarian setups. On the surface, however, that may be difficult to see. The stock is trading back near the same levels it reached 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 interesting, McDonald’s relative strength index (RSI) fell to 25 in mid-May, an extreme reading that has historically coincided with a bottom 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 HardAlthough 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 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 begun questioning whether the company’s best growth years are already behind it, especially in an environment where investors seem to care primarily 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 surged. 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 nearly impossible for competitors to match, let alone replicate. Importantly, management is not acting as though the company is preparing for a long-term slowdown. 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 is not the kind of move you would expect from a company bracing for 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, on a trailing 12-month basis, delivering record revenue and earnings per share while 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. At a 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 near 2022 levels, there appears to be an opportunity for investors 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 remains overwhelmingly bullish. This week alone, JPMorgan Chase reiterated 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 roughly 35% upside—not bad for a stock that is back near 2022 levels, is deeply oversold technically, and is still executing extremely well. Don’t be surprised if the market starts to catch onto this opportunity quickly. |
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