Since we looked at McDonald’s last year, the company has held onto its nine-point score for the third year in a row. Only a slightly high valuation has held McDonald’s back from a perfect 10, even as the stock has fallen by 5% over the past year.
After weathering the financial crisis quite well, McDonald’s has had a tough time lately. In January the company posted negative same-store sales for the second time in four months, with sales falling around the world. Only the U.S. market managed a slight gain.
A big part of the challenge McDonald’s faces is the fact that healthier food offerings have become more popular. Chipotle Mexican Grill, Inc. (NYSE:CMG), which was originally a spinoff from McDonald’s, has enjoyed huge growth because of its quality ingredients, despite having a very simple menu. Panera Bread Co (NASDAQ:PNRA) has also driven sales by emphasizing quality and tapping into a demographic that has more disposable income to spend.
But McDonald’s also faces competition from more traditional challengers. Burger King Worldwide Inc (NYSE:BKW) has renewed its efforts to regain its former glory by bulking up its menu. Meanwhile, in emerging markets, Yum! Brands, Inc. (NYSE:YUM) remains McDonald’s archrival, with KFC in particular going head-to-head against the Golden Arches for Chinese supremacy.
Interestingly, McDonald’s has made a recent push toward sustainability. By switching its fish supply to abundant Alaskan pollock, McDonald’s has climbed onto a bandwagon that has seen other major food-sellers hopping on, and the company has demonstrated a continued commitment to ethical practices after agreeing to stop using gestation crates in the next decade.
For retirees and other conservative investors, decades of dividend growth arguably make up for a somewhat pricey valuation. With shares offering a rare decline, retirement investors have an opportunity to buy McDonald’s on a dip — and that’s something that has historically paid off with extraordinary long-term gains.
The article Will McDonald’s Help You Retire Rich? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide, Chipotle Mexican Grill, McDonald’s, and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill, McDonald’s, and Panera Bread.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.