What To Expect From Restaurant Brands Stock Post Q4?

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 fourth-quarter results on Tuesday, February 14. We expect QSR’s stock to see little to no movement due to revenues coming slightly ahead but earnings missing expectations marginally in its fourth-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. Notably, the company’s net restaurant growth grew 2.5% year-over-year in Q3 FY’22 (compared to 2% growth in the previous year’s quarter) – despite significant cost inflation. Also, Tim Horton’s, 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 $67 per share, which is in line with the current market price. Look at our interactive dashboard analysis on Restaurant Brands Earnings Preview: What To Expect in Fiscal Q4? for more details.

(1) Revenues expected to be slightly ahead of consensus estimates

Trefis estimates QSR’s Q4 2022 revenues to be around $1.7 Bil, slightly ahead of the consensus estimate. QSR’s Q3 revenues grew 15% year-over-year (y-o-y) to $1.7 billion, fueled by strong same-store sales growth from Burger King’s overseas restaurants. The chain’s comparable sales rose 9.1% during the quarter, led by a 10.3% gain for the Burger King chain, a 9.8% rise for the Tim Hortons chain, and a 3.1% increase for the Popeyes chain. 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 does not expect to generate any profits from restaurants in Russia in 2022. During the third quarter, these restaurants had an estimated $12 million (or 2%), negative impact on their y-o-y organic adjusted EBITDA growth.

2) EPS is also likely to marginally miss consensus estimates

QSR’s Q4 2022 earnings per share (EPS) is expected to come in at 73 cents per Trefis analysis, a cent lower than the consensus estimate. In Q3, the company’s earnings grew a whopping 66% y-o-y to $1.18. 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 $3.17 and a P/E multiple of 21.0x in fiscal 2022, this translates into a price of $67, 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.

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