Here's a better way to look at it: McDonald's is now saying that it'll spend upwards of $18 billion over the next two years, but if its business stands still, it'll earn just $8 billion in free cash flow. Notably, standing still would be considered a good thing for investors who have watched McDonald's over the last two years. That means that McDonald's loses $10 billion somewhere along the road, and that's if no further operating losses occur.That said, I would love to give McDonald's the benefit of the doubt, and just assume that by the end of next year 10% of its annual revenue is from growth assets, and that it has a new identity with consumers in a refreshed, fast-growing brand. But McDonald's has given investors no reason to believe in this vision. Its global comparable sales fell 2.3% during its last quarter, and its profit fell almost $400 million year-over-year.All things considered, unless you are 100% confident that McDonald's will achieve its goals, you might not want to be invested in this company. At its current rate, McDonald's might very well have 5% less annual revenue and $10 billion lost on buybacks/dividends by the end of 2016. Personally, I am not confident that McDonald's can turn it around, and never like to see a struggling company spending over its annual free cash flow on shareholder return programs. The primary reason is because there are always places where a struggling company can put money to work in an attempt to become stronger, whether it be an acquisition or higher capital expenditures. Therefore, I would avoid the stock for now, and that's despite how seemingly attractive McDonald's $18 billion to $20 billion program may appear.
Thought I'd seen this before - the previous comment is a cut and paste from an opinion peice at the SeekingAlpha website. The entire article is at:http://seekingalpha.com/article/3183866-should-investors-buy-into-mcdonalds-capital-return-program?app=1&auth_param=b6c:1alcc9s:ec6d382211bdfe01ca031a1fb149221d&uprof=55
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