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 second-quarter results on Tuesday, August 8. We expect QSR’s stock to likely trade lower due to both revenues and earnings missing expectations marginally in its second-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 adding as many restaurants as possible. Also, Tim Hortons, Popeyes, and Firehouse Subs are far less penetrated across international markets than 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 nearly 7% lower than the current market price. Look at our interactive dashboard analysis on Restaurant Brands Earnings Preview: What To Expect in Fiscal Q2? for more details.
(1) Revenues expected to be slightly below consensus estimates
Trefis estimates QSR’s Q2 2023 revenues to be around $1.7 Bil, slightly below the consensus estimate. QSR’s Q1 revenues grew 10% year-over-year (y-o-y) to $1.59 billion, fueled by strong same-store sales growth from Burger King’s overseas restaurants. The company’s consolidated comparable sales were up nearly 10% in Q1, led by 16% growth at Tim Hortons Canada, 12% growth in Burger King International, and 9% growth at Burger King U.S. The management noted that increase in sales were aided by price hikes as increases in commodity prices were passed on to franchisees and an increase in sales to retailers. It should be noted that only locations that have been open for at least 13 months are included in its same-store sales metrics.
2) EPS is also likely to marginally miss consensus estimates
QSR’s Q2 2023 earnings per share (EPS) is expected to come in at 74 cents per Trefis analysis, two cents lower than the consensus estimate. In Q1, its earnings grew 3% y-o-y to $0.61 per share.
(3) Stock price estimate lower than the 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 7% lower 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.
What if you’re looking for a portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.
|S&P 500 Return||-2%||17%||101%|
|Trefis Multi-Strategy Portfolio||-3%||25%||302%|
 Month-to-date and year-to-date as of 8/4/2023
 Cumulative total returns since the end of 2016