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Restaurant Brands International Inc QSR

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International Strength Generates Robust Second-Quarter Results for RBI; Shares Slightly Undervalued

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Narrow-moat Restaurant Brands International generated solid second-quarter results, with a 32% jump in consolidated system sales (up 4.3% from 2019 levels) reflecting loosening restrictions in key international markets. Strength was widespread, with all three brands generating double-digit growth relative to 2020, and $1.36 billion in revenue (net of foreign exchange) eclipsed our quarterly forecast of $1.31 billion by about 4%. After contemplating international unit growth strength at Tim Horton’s and time value of money, we expect to raise our $69 fair value estimate by a low- to mid-single-digit percentage and view shares as undervalued even after a 4% rise after the report.

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Company Profile

Business Description

Restaurant Brands International is one of the largest restaurant companies in the world, with $31 billion in 2020 systemwide sales across a footprint that spans more than 27,000 restaurants and 100 countries. The firm generates revenue primarily from retail sales at its company-owned restaurants, royalty fees and lease income from franchised stores, and from its Tim Horton’s supply chain operations. Formed in 2014 after 3G Capital’s acquisition of Tim Horton’s International, the Restaurant Brands portfolio now includes Burger King (18,700 units), Tim Horton’s (5,000 units), and Popeyes Louisiana Kitchen (3,575 units).

Contact
130 King Street West, Suite 300, P.O. Box 339
Toronto, ON, M5X 1E1, Canada
T +1 905 339-5724
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type
Employees 5,200

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