McDonald’s Corporation

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker	Analyst	Analyst Email
Longbow Research	Alton K. Stump	astump@longbowresearch.com
Cowen & Company	Andrew M. Charles	andrew.charles@cowen.com
Jefferies	Andy Barish	abarish@jefferies.com
Deutsche Bank Research	Brett Levy	brett.levy@db.com
Oppenheimer	Brian Bittner	brian.bittner@opco.com
Raymond James	Brian Vaccaro	brian.vaccaro@raymondjames.com
RBC Capital Markets	David Palmer	david.palmer@rbccm.com
SunTrust Robinson Humphrey	Jake Bartlett	jake.bartlett@suntrust.com
Credit Suisse	Jason West	jason.west@credit-suisse.com
Wells Fargo Securities	Jeff Farmer	jeff.farmer@wellsfargo.com
CRT Capital Group	Lynne Collier	lcollier@sterneageecrt.com
Nomura Research	Mark Kalinowski	mark.kalinowski@nomura.com
Evercore ISI	Matt McGinley	matt.mcginley@evercoreisi.com
Guggenheim Securities	Matthew J. Difrisco	matthew.difrisco@guggenheimpartners.com
Piper Jaffray	Nicole Miller Regan	nmr@pjc.com
Stifel Nicolaus	Paul Westra	paul.westra@stifel.com
BTIG	Peter Saleh	psaleh@btig.com
Stephens Inc	Will Slabaugh	will.slabaugh@stephens.com

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Primary Input Data

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Derived Input Data

Derived Input	Label	2015 Value	2016 Value	Equational Form
Net Operating Profit Less Adjusted Taxes	NOPLAT	4,755	5,083	$NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)$
Free Cash Flow	FCF	4,725	4,239	$FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS$
Tax Shield	TS	197	72	$TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income$
Invested Capital	IC	34,988	27,556	$IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital$
Return on Invested Capital	ROIC	13.59%	18.45%	$ROIC\,=\,\frac { NOPLAT }{ IC }$
Net Investment	NetInv	5,011	(5,915)	$NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation$
Investment Rate	IR	105.36%	-116.38%	$IR\,=\,\frac {NetInv}{NOPLAT}$
Weighted Average Cost of Capital	WACC_Market	18.17%	15.48%	$WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)$
Weighted Average Cost of Capital	WACC_Book	6.18%	6.27%
Enterprise value	EV_Market	121,280	122,413	$EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash$
Enterprise value	EV_Book	130,028	106,387
Long-Run Growth	g = IR x ROIC	14.32%	-21.47%	Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
Long-Run Growth	g = % $\Delta$ GDP	2.50%	2.50%
Margin from Operations	M	28.79%	31.76%	$M\,\,=\,\,\frac{EBIT}{SALES}$
Depreciation/Amortization Rate	D	17.54%	16.25%	$D\,\,=\,\,\frac{D+A}{EBITDA}$

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form	Observed Value		Single-stage multiple g solution		Two-stage valuation model g solution
Equational Form	12/31/2015	12/31/2016	12/31/2015	12/31/2016	12/31/2015	12/31/2016
EV/SALES $\frac {EV}{Sales} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)$	4.77	4.97	20.03%	14.62%	19.46%	15.05%
EV/EBITDA $\frac {EV}{EBITDA} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)$	13.67	13.11	20.03%	14.62%	19.46%	15.05%
EV/NOPLAT $\frac {EV}{NOPLAT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}$	25.50	24.08	20.03%	14.62%	19.46%	15.05%
EV/FCF_OPS $\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	25.67	28.88	20.03%	14.62%	19.46%	15.05%
EV/EBIT $\frac {EV}{EBIT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	16.58	15.65	20.03%	14.62%	19.46%	15.05%
EV/IC $\frac {EV}{IC} \,= \,\frac{ROIC\, -\, g}{WACC\,-\,g}$	3.47	4.44	20.03%	14.62%	19.46%	15.05%

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