McDonald’s Stock Soars: Here’s the Secret Sauce Behind Today’s Surge

Golden arches, golden returns—McDonald's shares just got a turbocharged Happy Meal upgrade.

The Big Mac rally no one saw coming

Wall Street's chewing on something tastier than Quarter Pounders today. While analysts expected lukewarm performance, MCD's sizzling move left short sellers crying into their Shamrock Shakes.

Behind the numbers: A hedge fund special sauce

No major earnings beat or menu overhaul—just old-fashioned financial engineering. Turns out loading up on automation tech and dynamic pricing algorithms gets you further than adding another McFlurry flavor (though we’d kill for a Bitcoin Bites promotion).

The real meat? Institutional FOMO

When three mid-tier funds finally realized drive-thrus print cash during inflation, the herd mentality kicked in. Cue the most predictable ‘surge’ since their stock dipped last time a CEO mentioned ‘blockchain’ at a conference.

Bon appétit, bulls—just remember every institutional pump eventually meets its consumer-facing dump.

Image source: Getty Images.

McDonald's Q2 earnings

Global same-store sales grew 3.8% for McDonald's, with relatively greater strength outside the U.S. than within it. Revenue for the restaurateur grew even faster, up 5%, and profits faster still.

Operating income increased 11% and earnings as calculated according to generally accepted accounting principles (GAAP) grew 12% to $3.14 per share. That's not quite as much as the $3.19 adjusted profit, which backed out a nickel's worth of one-time charges. But it's more than 3 times faster than same-store-sales growth, indicating strong improvement in profit margins.

Is McDonald's stock a buy?

Management did not provide guidance for what to expect, sales-wise or earnings-wise, the rest of this year. Analysts who follow the stock, however, are forecasting more modest earnings growth of only 4.5% through the end of this year, and $12.25 per share in GAAP profit by year-end.

Valuation-wise, that works out to a rich 25x multiple on this globe-spanning fast-food restaurant stock. In an expensive stock market where the averagestock is selling for more than 29 times earnings, that may sound like a bargain. To me, though, paying 25 times earnings for 4.5% earnings growth and a 2.4% dividend yield seems too expensive to justify.

I wouldn't buy McDonald's stock at this price.