McDonald's Stock Is Up 24% In The Last Month - Is MCD Near A Peak?

McDonald's Corp location by- M_Suhail via iStock

McDonald's Corp. (MCD) stock hit a low of $230.88 about a month ago (Oct. 7) and since then has risen 24%. Is it at a peak? That's what the 6-month chart below from Barchart shows.

MCD closed up 1.78% on Monday, Nov. 9, at $281.44. The chart below shows that MCD is near its 6-month peaks.

MCD stock - last 6 months - Barchart - Nov. 9, 2026

The prior 6-month peak price was $287.93 on June 16. So, does MCD stock have more upside?

McDonald's just released the Q3 10-Q. That shows its free cash flow (FCF) figures. They came out on Friday, Nov. 6 (two days after its Nov. 4 earnings release, without any cash flow data).

The bottom line is there's not much upside.

For example, analysts surveyed by Yahoo! Finance see 6.2% upside at $299.00, and Barchart's mean survey price target (PT) is $306.33 (+8.85%). 

However, my estimate, based on its average FCF margins and FCF yields, as well as analysts' revenue forecasts, is only $286.79, or +1.9% higher. Let's see why.

Free Cash Flow Prospects

The 10Q showed that Q3 FCF was 11.17% lower than last year (see Stock Analysis data). Moreover, its quarterly FCF margin fell from over 34% last year to just 30% in Q3 this year.

The same happened with its trailing 12-month (TTM) FCF margins: they fell from 28.07% last year to just under 27.0% in Q3 this year. (The TTM figure is important as it accounts for seasonal changes in growth and margins.)

On top of this, revenue is not really on fire. It rose just 1% in Q3, and for all of 2026, it's projected to rise just 3.69% to $27.88 billion. However, over the past year, the TTM revenue has risen 5.78%. But that's down from last quarter, when TTM revenue rose 6.30%. So revenue growth is decelerating.

In fact, analysts project just 1.07% revenue growth over the coming year to $28.18 billion, up from $27.88 billion forecast for 2026.

This is important since FCF won't rise much as well. For example, here is a forecast for 2027:

  $28.18 billion est. x 0.27 FCF margin = $7.61 billion FCF 2027

That is only 1.6% higher than the Q3 TTM FCF of $7.49 billion.

As a result, the fair value for MCD stock is not that high.

Fair Value for MCD Stock

Today, MCD stock has a market capitalization of $198.7 billion, but it's down 6.8% over the last year.

That means that FCF has averaged just 3.76% of its average market cap of $199.17 billion. In other words, we can use a 26.6x FCF multiple (i.e., 1/0.0376) to value MCD going forward:

  $7.61 billion 2027 FCF est. x 26.6 = $202.5 billion valuation

But that's only $3.8 billion above its present market cap, i.e., +1.9% higher.

That implies a price target (PT) of just $286.79 per share. That's nothing to write home about.

So, what is the best MCD play here?

MCF Put Credit Spreads

Some investors might want to wait until MCF takes a breather here. After all, there is no guarantee that its Q4 earnings will do any better. And last quarter, the stock dipped a great deal mid-quarter.

Normally, I would suggest shorting out-of-the-money (OTM) puts. But it seems that it makes sense to wait for a potentially lower OTM short-put buy-in price.

However, for those willing to take on more risk, along with higher returns, doing a very short-term put credit spread could be profitable.

For example, the Dec. 4 expiry period, just over 3 weeks from now, shows the $260.00 put option contract has a midpoint premium of $0.82. And the $250 put, if bought, would cost $0.38. 

MCD puts expiring Dec. 4, 2026 - Barchart - Nov. 9, 2026

So, here is how that put credit spread works out:

  Short the $260 put: $82 collected  (delta ratio is -0.096, i.e., a 90%+ chance of success that MCD won't drop to $260 by Dec. 4)

  Buy the $250 put: -$38 cost

  Net Credit:   $44 per put credit spread

  $1,000 collateral (i.e., ($260 - $250) x 100): Therefore

  At-Risk Capital: $1,000 - 44 = $956

  Expected Return: $44/956 = 0.046 = 4.6% expected return

That is not that high a return, but keep in mind that the $260 put is over 7.6% out-of-the-money (OTM). This is a risky way to play MCD, given that 100% of the collateral could be lost. But at least it provides investors with some income, especially if they already are MCD shareholders.