The McDonald's (MCD 0.58%) story is the American dream. The company has grown into an absolute juggernaut of capitalism, and is the largest restaurant chain in the world. That said, it's been a bit of a boring investment over the last five years. The burger chain has struggled to keep up with the broader market, and doesn't look like the buy that it was in years past.

A stagnating giant

McDonald's has underperformed the S&P 500 by 20% over the last five years. The company has had on and off years, with top-line revenue growth not always hitting the mark. Most recently, full-year 2024 results were flat at $6.39 billion versus $6.4 billion in 2023, and came in below estimates of $6.44 billion, while net income declined 1% to a little under $2.02 billion, or $11.39 per share compared to 2023's earnings of $11.56 per diluted share.

Part of the reasoning for the recent weak quarter was an E. Coli outbreak that impacted certain menu items, such as the ever-loved quarter pounder. While this was certainly part of the problem, it is crucial to realize that the fourth quarter wasn't the whole story. McDonald's saw declines before the fourth quarter. Global comparable sales declined 1.5% in the third quarter, and 1% in the second quarter, showing broader weakness for the company.

McDonald's has made moves to try to counter the decline, such as a new affordable combo meal. According to recent commentary, the $5 combo meal does seem to have created a draw for more value centric consumers, but it means the company has to increase transactions in order to cover the decline in overall ticket for orders, or drive up the average ticket on those orders.

McDonald's itself noted that the overall average check on its $5 discount orders has actually come out to more than $10, but the full-year results raise the question of how much impact this is actually having.

A tough time beating the market

J.P. Morgan analysts put their McDonald's price target at $300 a share. That provides for basically no upside from current pricing, and furthers my feelings that this is not a stock that's going to beat the market.

Details for forward guidance were a bit sparse, but analyst estimates are calling for $12.28 per share in 2025. That would give the stock a forward P/E ratio of 24.78 times earnings. That's just below its historical 10-year average of 25.55 times earnings, according to Fullratio.com.

McDonald's is trying to spur sales through value options and new items like chicken strips, but one has to wonder whether the burger chain can keep the average check on these orders at $10, or if consumers will taper off and lower McDonald's average ticket per order. Either way, the trend certainly puts pressure on its more high-value items.

According to CNBC, McDonald's CFO Ian Borden expects the first quarter of 2025 to be the weak point for same-store sales. I hope that's the case, but the broader picture here has been one of lackluster results compared to competitors (from the point of view of stock performance). Newer rivals such as Chipotle Mexican Grill or Cava are outpacing McDonald's, and look primed to continue doing so. These two companies are producing revenue gains in the double digits annually, and seem more primed to grow compared to an older giant like McDonald's, which explains its lower valuation.

Let's be clear. This is still a strong company on its own, but McDonald's is demonstrating a performance that doesn't necessarily make it a strong investment. As much as I love a Big Mac from time to time, investing requires discipline, and it doesn't seem to make much sense in the fast food world to go with the more sluggish name. This is especially true if J.P. Morgan's estimates for its price point hold true.