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 2. We expect QSR’s stock to see little to no movement due to revenues coming slightly ahead but earnings missing expectations marginally in its first-quarter results. The fast-food giant’s next few quarters might show high volatility given the current macroeconomic situation. However, the company showcases solid mid-to-long-term growth prospects. The revenue stream of QSR is directly influenced by the system sales it generates across its brands, which can be increased by growing restaurant sales or by adding as many restaurants as possible. Also, Tim Hortons, Popeyes, and Firehouse Subs are far less penetrated across international markets compared to McDonald’s or Burger King. That means more room to open new restaurants and a longer runway for revenue growth.
Our forecast indicates that Restaurant Brands’ valuation is $68 per share, which is almost in line with the current market price. Look at our interactive dashboard analysis on Restaurant Brands Earnings Preview: What To Expect in Fiscal Q1? for more details.
(1) Revenues expected to be slightly ahead of consensus estimates
Trefis estimates QSR’s Q1 2023 revenues to be around $1.6 Bil, slightly ahead of the consensus estimate. QSR’s Q4 revenues grew 10% year-over-year (y-o-y) to $1.69 billion, fueled by strong same-store sales growth from Burger King’s overseas restaurants. The company’s consolidated comparable sales were up nearly 8% in Q4, led by 11% growth at Tim Hortons Canada and Burger King International. Restaurant growth accelerated to 1,266 net new units with Popeyes delivering its strongest development year since joining the brand. It should be noted that only locations that have been open for at least 13 months are included in its same-store sales metrics.
QSR included results from its franchised restaurants in Russia within reported key business metrics, but it did not generate any profits from restaurants in Russia in 2022. During the fourth quarter, the non-recurrence of 2021 profits from these restaurants had an estimated $11 million, or 2%, negative impact on y-o-y organic adjusted EBITDA growth. Consequently, beginning in the first quarter of 2023, the company intends to report its key performance indicators excluding the results from its franchised restaurants in Russia.
2) EPS is also likely to marginally miss consensus estimates
QSR’s Q1 2023 earnings per share (EPS) is expected to come in at 63 cents per Trefis analysis, a cent lower than the consensus estimate. In Q4, its adjusted earnings fell 3% y-o-y to $0.72 per share. But full-year 2022 adjusted EPS was up 11% y-o-y to $3.14. The improvement was primarily driven by an income tax benefit in the current year and a non-recurrence of a loss on early extinguishment of debt.
(3) Stock price estimate appropriately priced to current market price
Going by our QSR’s Valuation, with an EPS estimate of around $2.99 and a P/E multiple of 22.8x in fiscal 2023, this translates into a price of $68, which is almost in line with 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.
|S&P 500 Return||1%||9%||86%|
|Trefis Multi-Strategy Portfolio||1%||9%||243%|
 Month-to-date and year-to-date as of 4/28/2023
 Cumulative total returns since the end of 2016