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Restaurant Brands International (QSR)
NYSE:QSR
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Restaurant Brands International
(NYSE:QSR)
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Rating:61Neutral
Price Target:
$70.00
▲(3.52% Upside)
Action:DowngradedDate:02/17/26
The score is driven mainly by solid revenue scale and strong free-cash-flow generation, but is held back by high leverage and weaker recent profitability. Near-term technicals are bearish and valuation looks elevated on P/E despite an attractive dividend yield. Management’s 2026 guidance for continued ~8% organic AOI growth provides support, though commodity and brand-execution headwinds remain notable.
Positive Factors
Strong free cash flow generation
Consistent, high free cash flow provides durable capacity to fund dividends, service heavy debt, and invest in brand initiatives without relying on equity raises. This cash conversion strength underpins shareholder returns and preserves operating flexibility through cycles.
Franchise-heavy, scalable business model
A franchise-first model delivers recurring royalty and rent economics with low corporate capex and operating leverage. That structure sustains margin resilience, scales internationally with limited capital, and reduces operating volatility versus company‑owned chains.
International expansion and China JV support scalable growth
The China JV brings local capital and expertise, shifting development cost and execution risk to a majority partner while preserving upside via royalties and minority ownership. This materially increases long‑term unit growth runway and lowers RBI's capital intensity in a large market.
Negative Factors
High leverage and limited balance sheet flexibility
Elevated debt relative to equity heightens refinancing and interest‑rate sensitivity, constraining strategic optionality. High leverage limits capacity for opportunistic M&A, larger share repurchases, or cushioning during sales or margin shocks over the medium term.
Commodity cost pressure (beef) compressing margins
Sustained commodity inflation directly reduces franchisee four‑wall profitability and can cap royalty growth if pricing or mix can't fully offset costs. Persistent input inflation therefore risks systemwide AOI flow‑through and slows modernization or unit growth funded by franchisees.
Brand execution weakness and subdued unit growth
Weakness at a major brand and a trough in net restaurant growth signal uneven execution across the portfolio. Prolonged brand underperformance or slower unit expansion can reduce royalty momentum, delay margin recovery from remodels, and require incremental support or leadership changes.
Restaurant Brands International (QSR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$31.37B
Dividend Yield3.6%
Average Volume (3M)2.65M
Price to Earnings (P/E)29.3
Beta (1Y)0.32
Revenue Growth16.82%
EPS Growth-29.91%
CountryUS
Employees37,600
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)N/A
Shares Outstanding346,504,180
10 Day Avg. Volume3,185,308
30 Day Avg. Volume2,645,632
Financial Highlights & Ratios
PEG Ratio-1.12
Price to Book (P/B)6.27
Price to Sales (P/S)2.42
P/FCF Ratio15.73
Enterprise Value/Market Cap1.23
Enterprise Value/Revenue4.10
Enterprise Value/Gross Profit9.12
Enterprise Value/Ebitda16.18
Forecast
1Y Price Target
$76.61Price Target Upside13.29% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
EPS Forecast (FY)4.04
Revenue Forecast (FY)$9.83B
Restaurant Brands International Business Overview & Revenue Model
Company DescriptionRestaurant Brands International Inc. operates as quick service restaurant company in Canada and internationally. It operates through four segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), and Firehouse Subs (FHS). The company owns and franchises TH chain of donut/coffee/tea restaurants that offer blend coffee, tea, and espresso-based hot and cold specialty drinks; and fresh baked goods, including donuts, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups, and others. It is also involved in owning and franchising BK, a fast food hamburger restaurant chain, which offers flame-grilled hamburgers, chicken and other specialty sandwiches, french fries, soft drinks, and other food items; and PLK quick service restaurants that provide Louisiana style fried chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. In addition, the company owns and franchises FHS restaurants quick service restaurants that offer subs, soft drinks, and local specialties. As of February 15, 2022, the company had approximately 29,000 restaurants in 100 countries under the Tim Hortons, Burger King, Popeyes, And Firehouse Subs brands. Restaurant Brands International Inc. was founded in 1954 and is headquartered in Toronto, Canada.
How the Company Makes MoneyRestaurant Brands International generates revenue primarily through its franchising model, which allows the company to earn significant fees from franchisees based on sales and royalties. Additionally, it makes money from company-operated restaurants, where it retains a larger portion of revenues. The company also benefits from supply chain efficiencies and product distribution, which contribute to its earnings. Strategic partnerships, such as collaborations with food suppliers and technology firms, enhance operational capabilities and customer engagement, further driving revenue growth.
Restaurant Brands International Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes revenue from different business segments, highlighting which areas are driving growth and where there might be challenges or opportunities for expansion.
Analyzes revenue from different business segments, highlighting which areas are driving growth and where there might be challenges or opportunities for expansion.
Data provided by:
The Fly
The FlyRestaurant Brands International Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call conveyed a broadly positive tone: the company delivered consistent and predictable earnings growth (third consecutive year of ~8% organic AOI growth) with strong International momentum, Tim Hortons resilience, meaningful cash generation, and progress on refranchising. Key negatives included commodity-driven pressure (notably beef) that compressed Burger King franchisee profitability, weaker Popeyes sales and execution challenges, a temporary P&L headwind from BK China classification in 2025, and a near-term lull in consolidated unit growth. Management provided actions and guidance to mitigate these issues and reiterated a commitment to another year of 8% AOI growth in 2026, indicating confidence that the positives outweigh the headwinds.Q4-2025 Updates
Positive Updates
Consistent Earnings Growth
Organic adjusted operating income (AOI) growth of 8.3% for FY2025 and nominal adjusted EPS growth of 10.7% to $3.69 per share — the third consecutive year of roughly 8% organic AOI growth.
Top-Line Performance
Full-year comparable sales +2.4%, net restaurant growth +2.9%, and system-wide sales growth +5.3%, demonstrating underlying revenue momentum across the portfolio.
Strong Cash Generation and Shareholder Returns
Generated nearly $1.6 billion of free cash flow in 2025 (including $365 million of CapEx/cash inducements) and returned $1.1 billion to shareholders via dividends.
Tim Hortons Outperformance and Customer Engagement
Tim Hortons Canada Q4 comparable sales +2.8% (outperforming Canadian QSR by ~2 points); Q4 beverage +3.2% and cold beverages +8.6% (27% of beverage mix, record Q4); breakfast sales +3.5%; average four-wall EBITDA in Canada ~C$295,000; digital/kiosk adoption and loyalty strong (≈33% of sales from members).
International Segment Strength
International comparable sales +4.9% for the year (Q4 +6.1%), net restaurant growth +4.9%, and system-wide sales growth ~11%; standout market performance includes Burger King Japan (+22% comps in 2025) and multiple billion-dollar country businesses (e.g., Spain, Germany, Australia, Brazil, UK, France).
Strategic Partnership and Capital for China
Completed joint venture for Burger King China with CPE; CPE injected $350 million of primary capital and the parties aim to roughly double the restaurant footprint to at least 2,500 units by 2030.
Burger King US Operational Progress
Burger King US comparable sales +1.6% for the year (Q4 +2.6%); outperformed the burger QSR industry in 9 of the last 12 quarters; modern image penetration increased to 58% (from 51%); A operator restaurants outperformed system-average profitability by nearly $50,000.
Firehouse Subs Momentum
Firehouse comparable sales +1.1% for the year (Q4 +2.1%), net restaurant growth +7.7% with 104 net new restaurants opened, driving system-wide sales growth of 8% and franchisee profitability rising to over $100,000.
Cost and Expense Discipline
Segment G&A stepped down by $38 million year-over-year and adjusted net interest expense decreased ~$43 million year-over-year, aiding flow-through from system sales to AOI.
Refranchising Momentum
Began Burger King US refranchising ahead of schedule and slightly exceeded guidance (target 50–100 restaurants refranchised in 2025), accelerating the shift toward a higher franchise mix.
Negative Updates
Popeyes Sales and Profitability Softness
Popeyes net restaurant growth +1.6% but comparable sales down -3.2% for FY2025, resulting in system-wide sales decline of -0.7% and a decline in average franchisee profitability to roughly $235,000; company has initiated leadership and operational changes to address execution weaknesses.
Significant Beef Cost Headwind at Burger King US
Beef costs rose over 20% in 2025 (commodity inflation for BK US ~7%), driving Burger King franchisee average four-wall profitability down to ~ $185,000 from ~$205,000 in 2024 and pressuring restaurant-level margins.
Consolidated Unit Growth Lull
2025 represented a low point for consolidated net restaurant growth (2.9% NRG), below longer-term targets and described as a trough the company expects to reaccelerate from in 2026.
BK China Accounting and Short-Term P&L Impact
Burger King China was classified as held for sale in 2025 and excluded from International segment P&L, creating a ~$37 million revenue headwind in 2025; 2024 royalties of $32 million are no longer recognized in the 2025 P&L until the new JV royalties phase in.
Restaurant Holdings and Carrols Pressure
BK Carrols restaurant-level margin was 11.1% in 2025 and remains pressured by commodity inflation; Restaurant Holdings AOI is expected to decline (guidance ~$10–$20 million) due to refranchising and investments in start-up international markets.
Capital Intensity and Slower Remodel Pace
2026 CapEx and cash inducements expected to rise to ~ $400 million (from $365 million), while the cost environment is slowing remodel cadence — delaying the path to prior modernization targets (e.g., 85% modern image target will take longer).
Lingering Cost Pressures and Tariff Impacts
Tim Hortons franchisee P&Ls faced headwinds from tariffs and higher coffee/commodity costs despite resilient top-line; net bad debt expense remained notable at $21 million (vs $24 million in 2024).
Company Guidance
Management guided to deliver a fourth consecutive year of on‑algorithm ~8% organic adjusted operating income (AOI) growth in 2026, while projecting segment G&A (ex‑Restaurant Holdings) of ~$600–620M (vs $594M in 2025), net adjusted interest expense roughly flat at ~$500–520M (assumes mid‑3% SOFR impacting ~15% of debt), and CapEx plus cash inducements of ~ $400M (vs $365M in 2025); Tim Hortons supply‑chain margins are expected roughly in line with 2025 and Q1 is forecast to be the softest margin quarter. They expect modestly positive net restaurant growth from Burger King China in 2026 (noting that returning BK China to neutral NRG would imply ~70 basis points to consolidated 2025 unit growth), China royalties beginning a couple points below a 5% rate and ramping to 5% over time (BK China royalties were $32M in 2024), and Restaurant Holdings AOI of roughly $10–20M with BK Carrols restaurant‑level margin about 11.1% in 2025 and expected to be similar in 2026; management reiterated the goal to reaccelerate toward ~5% net restaurant growth over the algorithm period.Restaurant Brands International Financial Statement Overview
Summary
Strong, improving cash generation (operating cash flow up to $1.71B and free cash flow ~$1.45B in 2025) supports dividends and debt service, and revenue growth has been steady ($5.0B in 2020 to $9.4B in 2025). However, the balance sheet is a major constraint with high leverage (~$17.4B debt vs ~$3.6B equity) and profitability softened in 2025 (net income down to $776M and net margin down to ~8.2%).Income Statement
Revenue has grown steadily from $5.0B (2020) to $9.4B (2025), showing solid top-line momentum. Profitability remains healthy with strong EBITDA margins in recent years (generally ~30%+ from 2021–2024), but 2025 shows notable pressure in net margin (down to ~8.2% from ~12.1% in 2024) and net income (down to $776M from $1.02B), indicating rising costs and/or heavier below-the-line expenses despite higher sales.72
Positive
Balance Sheet
The balance sheet is highly levered: total debt rises to ~$17.4B in 2025 against ~$3.6B of equity, implying elevated financial risk and reduced flexibility versus downturns. While equity has grown over time (about $2.2B in 2020 to $3.6B in 2025) and assets increased to ~$25.6B, leverage remains the key weakness, leaving results more sensitive to rates, refinancing conditions, and earnings volatility.48
Neutral
Cash Flow
Cash generation is consistently strong, with operating cash flow improving from $921M (2020) to $1.71B (2025) and free cash flow reaching ~$1.45B in 2025. Free cash flow generally tracks earnings well (free cash flow around ~85–93% of net income across years), supporting debt service and shareholder returns, though cash flow growth has been uneven year-to-year.76
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 9.43B | 8.41B | 7.02B | 6.50B | 5.74B |
| Gross Profit | 3.88B | 3.02B | 2.80B | 2.60B | 2.37B |
| EBITDA | 2.42B | 2.66B | 2.24B | 2.07B | 2.04B |
| Net Income | 776.00M | 1.02B | 1.19B | 1.01B | 838.00M |
Balance Sheet | |||||
| Total Assets | 25.61B | 24.63B | 23.39B | 22.75B | 23.25B |
| Cash, Cash Equivalents and Short-Term Investments | 1.16B | 1.33B | 1.14B | 1.18B | 1.09B |
| Total Debt | 17.58B | 15.96B | 14.52B | 14.49B | 14.62B |
| Total Liabilities | 20.46B | 19.79B | 18.66B | 18.48B | 19.39B |
| Stockholders Equity | 3.63B | 3.11B | 2.87B | 2.50B | 2.24B |
Cash Flow | |||||
| Free Cash Flow | 1.45B | 1.30B | 1.20B | 1.39B | 1.62B |
| Operating Cash Flow | 1.71B | 1.50B | 1.32B | 1.49B | 1.73B |
| Investing Cash Flow | -399.00M | -660.00M | 11.00M | -64.00M | -1.10B |
| Financing Cash Flow | -1.44B | -625.00M | -1.37B | -1.31B | -1.09B |
Restaurant Brands International Technical Analysis
Positive
67.62
Price Trends
68.71
Positive
68.38
Positive
66.93
Positive
Market Momentum
-0.07
Positive
51.19
Neutral
50.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QSR, the sentiment is Positive. The current price of 67.62 is below the 20-day moving average (MA) of 68.44, below the 50-day MA of 68.71, and above the 200-day MA of 66.93, indicating a bullish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 51.19 is Neutral, neither overbought nor oversold. The STOCH value of 50.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for QSR.
Restaurant Brands International Risk Analysis
Restaurant Brands International disclosed 31 risk factors in its most recent earnings report. Restaurant Brands International reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Restaurant Brands International Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $237.18B | 27.86 | ― | 2.31% | 1.26% | 2.87% | |
75 Outperform | $20.24B | 22.31 | 16.73% | 1.98% | 3.29% | 6.72% | |
74 Outperform | $45.87B | 29.91 | ― | 1.84% | 11.60% | -4.33% | |
67 Neutral | $47.53B | 32.81 | 47.36% | ― | 7.31% | 5.26% | |
67 Neutral | $13.93B | 23.57 | ― | 1.63% | 3.92% | 4.98% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $31.37B | 29.28 | 26.75% | 3.60% | 16.82% | -29.91% |
* Consumer Cyclical Sector Average
QSR
Restaurant Brands International
67.62
6.24
10.17%
CMG
Chipotle
37.50
-15.92
-29.80%
DPZ
Domino's Pizza
403.94
-67.65
-14.34%
MCD
McDonald's
333.01
35.68
12.00%
YUM
Yum! Brands
165.23
16.59
11.16%
YUMC
Yum China Holdings
56.43
8.44
17.60%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.