Mcdonalds Corp

McDonald's rent-and-royalty business is intact and generates enough cash to fund its investment and its dividend. This quarter, though, profit grew faster than customer demand. Global comparable sales slowed to +1.5% from +3.6% a year earlier, and U.S. comparable sales fell −0.2%. Operating income still rose 7%, and about $106M of the gain came from selling restaurants and property. Over nine months, free cash flow of $5.85B barely covered $5.72B of dividends and buybacks (my calculation). The new NEXT plan calls for about $5B of franchisee support through 2030, on terms not yet settled. On balance the fundamentals are little changed: the restaurant count keeps growing, but traffic at existing restaurants does not.

• Q3 revenue was $7,157M (+1%) and operating income $3,595M (+7%). Diluted earnings per share were $3.51 (+10%), or $3.57 (+11%) excluding restructuring charges.
• Comparable sales by segment, against a year earlier:
• U.S.: −0.2%, versus +2.4%.
• International Operated Markets: +1.4%, versus +4.3%.
• International Developmental Licensed Markets: +4.2%, versus +4.7%.
• Systemwide sales: +4%.
• 2026 guidance was trimmed, with other 2026 guidance unchanged:
• Capital spending: about $3.7B, from $3.7–3.9B.
• Gross openings: about 2,500, from about 2,600.
• Net additions: about 2,100, kept.
• The 50,000-restaurant target moved to end-2028 from end-2027.
• At the September 23 Investor Day, management launched McDonald's > NEXT. It includes about $8.5B of franchisee "partnering support" through 2036 and an operating-margin target in the low-to-mid 50% range by 2030.
• The quarterly dividend rose 4% to $1.93, payable December 15, 2026. Q3 buybacks were $519M.

Its findings, each with the evidence, the strongest counterpoint and what would prove it wrong:

• Profit outran sales on asset-sale gains and lapped costs
• U.S. traffic is the weak spot, and the fix is still in testing
• Unit growth carries the top line, but the pace was trimmed
• NEXT puts costs on McDonald's before the benefits arrive, on unsettled terms

Then its finances, the quality of its earnings, its management, the case for and against, and what to watch, its claims cited to the filings and checked against them.

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