Back in early March, McDonald’s Corporation (NYSE:MCD) stock was dropping big on concerns that its quarterly numbers weren’t going to be that good. Macro data implied that restaurant trends in early 2018 were weak, while analysts were trimming estimates for comparable sales growth at MCD.

Consequently, McDonald’s stock dropped to below $150.

MCD just reported those “supposed to be weak” quarterly numbers. They weren’t weak at all. In fact, they were just as strong as they’ve been over the past several quarters.

Clearly, the McDonald’s turnaround plan is working. The restaurant continues to gain popularity, even in the face of macro restaurant spending headwinds.

I believe that MCD will continue to post robust numbers, thanks to initiatives like “Better Chicken” and fresh beef patties. But at current levels, McDonald’s stock seems fully priced for robust growth to continue. Thus, I think McDonald’s stock is fairly valued here and now.

Here’s a deeper look:

McDonald’s Turnaround Is Powerful

Comparable sales growth in the quarter came in at 5.5%, well above the consensus expectation for a 3.8% rise. That is now 11 consecutive quarters of positive comparable sales growth, and four consecutive quarters of comparable sales growth in the 5-6% range. It is also five consecutive quarters of positive guest counts.

What is driving this big growth? A few things, all of which have longevity.

McDonald’s has forever dominated on price and convenience. They’ve always been the quickest and cheapest place to get food. But they have also been known to be one of the dirtiest and unhealthiest places to get food.

That is changing in a big way. McDonald’s is reforming itself as a fast casual chain that offers much improved quality food and an enhanced quality of service for still really cheap prices.

Examples of this include the company’s “Better Chicken” initiative, which entails de-emphasizing the traditionally unhealthy Chicken McNuggets and emphasizing much healthier Buttermilk Crispy Tenders. MCD is also swapping out frozen beef patties and using fresh beef for its popular Quarter Pounders and other premium burgers. The company has also added a ton of new menu options that fall in the health category.

All of this is working. Plus, MCD has a massive tailwind through delivery — the rise of Uber Eats and other delivery platforms has made it easier than ever to order McDonald’s food.

Put it all together, and it’s easy to see why McDonald’s is winning. It is also easy to see why this winning will continue. The company’s growth drivers — delivery, healthy options, store redesigns — are long-term in nature, and therefore, should drive long-term positive results.

McDonald’s Stock Is Fully Valued

Despite this robust growth narrative, McDonald’s stock doesn’t look terribly attractive at current levels.

The company is re-franchising a whole bunch of locations to improve overall profitability. As a result, net sales are in retreat. But these re-franchising efforts are in their last inning. The company is targeting a 95% franchise model, and currently runs on a 92% franchise model.

Most analysts expect net sales to bottom out next year around $20.8 billion. Thereafter, net sales should grow around 5% per year, driven by mid single-digit comparable sales growth. If so, revenues in five years should look something like $24.1 billion.

Operating margins continue to rise, thanks to the re-franchising. Right now, they hover around 42%. Consequently, 45% operating margins seem like a reasonable target in five years.

That would imply operating profits of $10.8 billion in five years. Taking out $1 billion for interest expense, 26% for taxes, and dividing by a presumably significantly reduced share count of 600 million, that equates to about $12.10 in earnings per share in five years.

A historically normal 19-times forward multiple on those $12.10 earnings implies a four-year forward price target of $230. Discounted back by 10% per year, that equates to a present value of roughly $157.

Bottom Line on McDonald’s Stock

Great story. Slightly overvalued stock.

This a buy-the-dip stock. Right now, this isn’t a dip. As such, I’ll wait for the next dip to buy back into McDonald’s stock.

As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.