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Restaurant Brands International Inc - Stock Quote QSR

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Morningstar's Restaurant Brands International Inc Stock Analysis

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Mixed Quarter for RBI as International Strength Offsets Soft U.S. Results; Shares Slightly Cheap

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Narrow-moat Restaurant Brands International posted mixed first quarter results, despite $1.45 billion in sales and $0.64 EPS modestly exceeding our $1.38 billion and $0.57 expectations. The firm's international partnerships continue to represent a meaningful point of strength, with comparable store sales in the Burger King and Popeyes segments outpacing their U.S. counterparts by astounding margins of of 20.6% and 13.8%, respectively. Even held up against prepandemic results, the Burger King domestic business has seen three-year comparable store sales clock in at negative 0.8% (against 13.4% internationally), suggesting a long route to recovery for brand president Tom Curtis and crew. As we consider slightly slower than expected unit growth, driven by tangled supply chains and permitting delays, a protracted comparable store sales recovery in the Tim Horton's segment (this time driven by lockdowns in China) and slightly weaker supply chain profitability, we expect to trim our $66 and CAD 84 fair value estimates by a low-single-digit percentage. Shares look slightly undervalued.

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Restaurant Brands International Inc's Company Profile

Business Description

Restaurant Brands International is one of the largest restaurant companies in the world, with more than $35 billion in 2021 systemwide sales across a footprint that spans more than 28,000 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 (19,250 units), Tim Horton’s (5,300 units), and Popeyes Louisiana Kitchen (3,700 units). The 2021 acquisition of Firehouse Subs brings another 1,200 units and $1.1 billion in systemwide sales in-house.

Contact
130 King Street West, Suite 300, P.O. Box 339
Toronto, ON, M5X 1E1, Canada
T +1 905 339-6011
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 5,700

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