MCD vs YUM

For growth investors, Yum!

Brands, Inc. (YUM) is the stronger pick with 8. 8% revenue growth year-over-year, versus 1. 7% for McDonald's Corporation (MCD). McDonald's Corporation (MCD) offers the better valuation at 25. 0x trailing P/E (21. 6x forward), making it the more compelling value choice. Analysts rate McDonald's Corporation (MCD) a "Buy" — based on 62 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, McDonald's Corporation (MCD) is the cheapest at 25.

0x versus Yum! Brands, Inc. at 27. 7x. On forward P/E, McDonald's Corporation is actually cheaper at 21. 6x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Yum! Brands, Inc. wins at 1. 68x versus McDonald's Corporation's 2. 83x — a reasonable growth-adjusted valuation.

Over the past 5 years, Yum!

Brands, Inc. (YUM) delivered a total return of +37. 4%, compared to +34. 8% for McDonald's Corporation (MCD). Over 10 years, the gap is even starker: YUM returned +198. 9% versus MCD's +161. 9%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), McDonald's Corporation (MCD) is the lower-risk stock at 0.

11β versus Yum! Brands, Inc. 's 0. 19β — meaning YUM is approximately 70% more volatile than MCD relative to the S&P 500.

By revenue growth (latest reported year), Yum!

Brands, Inc. (YUM) is pulling ahead at 8. 8% versus 1. 7% for McDonald's Corporation (MCD). On earnings-per-share growth, the picture is similar: Yum! Brands, Inc. grew EPS 6. 5% year-over-year, compared to -1. 5% for McDonald's Corporation. Over a 3-year CAGR, YUM leads at 6. 3% annualised revenue growth. Higher growth typically commands a higher valuation multiple — check whether the premium P/E or P/S is justified by the growth rate using the PEG ratio.

McDonald's Corporation (MCD) is the more profitable company, earning 31.

7% net margin versus 19. 0% for Yum! Brands, Inc. — meaning it keeps 31. 7% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: MCD leads at 45. 2% versus 30. 8% for YUM. At the gross margin level — before operating expenses — MCD leads at 56. 8%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential.

By this metric, Yum! Brands, Inc. (YUM) is the more undervalued stock at a PEG of 1. 68x versus McDonald's Corporation's 2. 83x. Both stocks trade at elevated growth-adjusted valuations, so expected growth needs to materialise. On forward earnings alone, McDonald's Corporation (MCD) trades at 21. 6x forward P/E versus 22. 8x for Yum! Brands, Inc. — 1. 2x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for MCD: 23. 5% to $352. 25.

All stocks in this comparison pay dividends.

McDonald's Corporation (MCD) offers the highest yield at 2. 4%, versus 1. 8% for Yum! Brands, Inc. (YUM).

For long-horizon retirement investors, McDonald's Corporation (MCD) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.

11), 2. 4% yield, +161. 9% 10Y return). Both have compounded well over 10 years (MCD: +161. 9%, YUM: +198. 9%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Consumer Cyclical sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both.

These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.