Use This Unorthodox But Effective Metric To Value Mcdonald's Stock

In the first article of this two-part series, we looked to the EV-to-EBITDA ratio to bring clarity when valuing McDonald's Corporation (NYSE: MCD), given its recent debt expansion and intended transformation to a company that will be nearly completely franchised in the future.As a quick refresher: EV, or "enterprise value," is a company's total market capitalization plus net outstanding debt. EBITDA, or earnings before interest, taxes, depreciation, and amortization, removes the non-cash items of interest expense, tax effects, and depreciation and amortization from the income statement. The adjustment of earnings by non-cash items in EBITDA approximates a company's cash flow.Continue reading

 

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