A big danger with a classic-growth company is that it may be reaching the end of the growth stage of its life cycle and will soon slip into the slow-growth category. That's especially true of a company the size of McDonald's, which boasts more than $13 billion in annual sales. It is possible that the company has saturated its flagship U.S. market and has little room to grow.
McDonald's growth has indeed slowed down in recent years. Its year-on-year growth in revenue and operating earnings fell below 10% in the late 1990s, after being in the teens during most of the decade. On the other hand, revenue growth and cash flow both increased in 1998 and 1999, indicating that the company still has some kick left in it.
Where Is Growth Coming From? >>