Restaurant Brands International Inc. stock (NYSE: QSR) is one of the largest fast-food restaurant chains in the world and it is a combination of Burger King, Tim Hortons, Popeyes, and, since late 2021, also Firehouse Subs. The company is scheduled to report its fiscal first-quarter results on Tuesday, May 3. We expect QSR’s stock to trade higher due to revenues and earnings beating expectations in its first-quarter results. Lifting Covid-19 restrictions boosted the restaurant business revenues in 2021, which led to 16% growth year-over-year (y-o-y) to $5.8 billion, operating profit of $1.9 billion (up 32% y-o-y), adjusted net income of $1.3 billion (up 38% y-o-y), and free cash flow of $1.6 billion (more than double y-o-y growth). In all counts, it was significantly better than 2020 and even better than 2019 levels. We expect improvement in QSR’s domestic markets of Tim Hortons Canada, and Burger King U.S., and continued growth in international markets to drive the company’s revenue growth going forward.
Our forecast indicates that Restaurant Brands’ valuation is $68 per share, which is 17% higher than the current market price. Look at our interactive dashboard analysis on Restaurant Brands Earnings Preview: What To Expect in Fiscal Q1? for more details.
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(1) Revenues expected to be slightly ahead of consensus estimates
Trefis estimates QSR’s Q1 2022 revenues to be around $1.47 Bil, 4% ahead of the consensus estimate. In Q4, QSR’s revenue grew 13% y-o-y to $1.54 billion, driven by improved comparable sales across all brands, including Tim Hortons Canada (+10.3%), Burger King U.S. (+11.3% ), Popeyes (0.4%), and Firehouse Subs (+14.7%). In addition, adjusted EBITDA also grew by 17% y-o-y to $584 million. Also, digital investments were well received by customers, with global digital sales in 2021 reaching $10 billion, up from $6 billion in 2020, and now representing about 30% of the company’s global system-wide sales. For the full year of 2022, we forecast QSR’s Revenues to be $5.9 billion, up 3% y-o-y.
Burger King’s system-wide sales were about 66% of the group’s total sales for 2021. Also, Burger King contributed 45% of the adjusted EBITDA in 2021, followed closely by Tim Hortons with 44% and Popeyes with 11%. Overall, Restaurant Brands sees store expansion, store sales growth, and cost management as major profit drivers.
2) EPS is also likely to be comfortably ahead of consensus estimates
QSR’s Q1 2022 earnings per share (EPS) is expected to come in at 68 cents per Trefis analysis, 5 cents above the consensus estimate. The company’s Q4 adjusted EPS came in at 74 cents, up 40% y-o-y.
(3) Stock price estimate higher than the current market price
Going by our QSR’s Valuation, with an EPS estimate of around $2.90 and a P/E multiple of 23.4x in fiscal 2022, this translates into a price of $68, which is almost 17% higher than the current market price.
It is helpful to see how its peers stack up. QSR Peers shows how Restaurant Brands’ stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
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|Trefis Multi-Strategy Portfolio||0%||-17%||227%|
 Month-to-date and year-to-date as of 5/2/2022
 Cumulative total returns since the end of 2016