Restaurant BrndLP (QSP.UN) AI Stock Analysis

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Restaurant BrndLP

(TSX:QSP.UN)

Rating:73Outperform

Price Target:―

Restaurant BrndLP shows robust financial performance with strong revenue growth and improved debt management. While technical indicators are bearish, suggesting caution, the earnings call provided a positive outlook with strong sales growth and strategic initiatives. The stock's valuation appears fair, supported by a healthy dividend yield.

Restaurant BrndLP (QSP.UN) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$44.90B

Dividend Yield3.34%

Average Volume (3M)123.00

Price to Earnings (P/E)24.1

Beta (1Y)0.04

Revenue Growth21.63%

EPS Growth-9.39%

CountryCA

Employees37,600

SectorConsumer Cyclical

Sector Strength68

IndustryRestaurants

Share Statistics

EPS (TTM)4.11

Shares Outstanding126,983,116

10 Day Avg. Volume50

30 Day Avg. Volume123

Financial Highlights & Ratios

PEG Ratio-0.79

Price to Book (P/B)6.99

Price to Sales (P/S)0.00

P/FCF Ratio16.92

Enterprise Value/Market Cap0.82

Enterprise Value/Revenue1.18

Enterprise Value/Gross Profit8.20

Enterprise Value/Ebitda3.47

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Restaurant BrndLP Business Overview & Revenue Model

Company DescriptionRestaurant Brands International Limited Partnership operates and franchises quick service restaurants in the United States and internationally. The company operates through four segments: Tim Hortons (TH), Burger King (BK), Popeyes (PLK), and Firehouse Subs (FHS). Its restaurants offer blend coffee, tea, espresso-based hot and cold specialty drinks under Tim Hortons brand; flame-grilled hamburgers, chicken and other specialty sandwiches, french fries, and soft drinks under Burger King brand; fried chicken, chicken tenders, fried shrimp and other seafood, red beans and rice and other regional items under Popeyes brand; hot and hearty subs piled high with quality meats and cheese, as well as chopped salads, chili and soups, signature and other sides, soft drinks, and local specialties under Firehouse Subs brand. As of December 31, 2021, it owned or franchised a total of 5,291 TH restaurants; 19,247 BK restaurants; 3,705 PLK restaurants; and 1,213 FHS. Restaurant Brands International Inc. serves as the general partner of the company. The company was formerly known as New Red Canada Limited Partnership and changed its name to Restaurant Brands International Limited Partnership in December 2014. The company was founded in 1954 and is headquartered in Toronto, Canada. Restaurant Brands International Limited Partnership is a subsidiary of Restaurant Brands International Inc.

How the Company Makes MoneyRestaurant BrndLP makes money primarily through franchise fees, royalty income, and management services. The company earns revenue by licensing its portfolio of restaurant brands to franchisees, who pay initial franchise fees and ongoing royalties based on a percentage of their sales. Additionally, Restaurant BrndLP generates income by offering comprehensive management services to ensure operational efficiency and brand consistency across its franchise network. Strategic partnerships with suppliers and marketing firms also play a significant role in enhancing brand value and expanding market reach, contributing to the company's overall earnings.

Restaurant BrndLP Earnings Call Summary

Earnings Call Date:Oct 24, 2023

(Q1-2024)

% Change Since: 0.74%|

Next Earnings Date:Apr 25, 2024

Earnings Call Sentiment Positive

The earnings call provided a positive outlook on system-wide sales growth and strong brand performance, particularly in the U.S. and Canadian markets. However, challenges in international markets and increased G&A expenses were noted as areas of concern.

Q1-2024 Updates

Positive Updates

Strong System-Wide Sales Growth

First quarter consolidated comparable sales of 4.6% and net restaurant growth of 3.9%. This translated into system-wide sales growth of 8.1% and organic adjusted operating income growth of 7.7%.

Tim Hortons Canada Success

Tim Hortons in Canada reported a 7.5% increase in comparable sales, including mid-single-digit traffic growth and 8.3% growth in system-wide sales.

Burger King U.S. Outperformance

Burger King U.S. comparable sales and traffic outperformed the industry, driven by operational improvements and a balanced menu of value and calendar initiatives.

POPEYES U.S. Growth

POPEYES U.S. grew comparable sales by 6.2% and net restaurants by 4.0%, resulting in system-wide sales growth of 10.2%.

Digital Sales Growth

Increased mobile order and pay, kiosk usage, and adoption of loyalty programs drove digital sales growth of 37% year-over-year for Burger King, resulting in a digital sales mix of 17%.

Negative Updates

International Market Challenges

Challenges in certain international markets like China impacted near-term performance. International comparable sales were 4.2% with an 8.4% net restaurant growth, driving system-wide sales growth of 11.6%.

Higher G&A Expenses

Segment G&A increased by $16 million year-over-year, primarily due to higher compensation-related expenses associated with increased headcount.

Bad Debt Expenses

Recorded over $7.5 million of net bad debt expenses compared to $5.5 million in Q1 of '23, impacting international royalties and Tim Hortons supply chain business.

Company Guidance

In the Restaurant Brands International Q1 2024 earnings call, the company reported several key metrics reflecting their performance and strategic direction. They achieved a 4.6% increase in consolidated comparable sales, with net restaurant growth at 3.9%, translating to an 8.1% system-wide sales growth and a 7.7% growth in organic adjusted operating income. Tim Hortons in Canada reported a 7.5% increase in comparable sales, driven by mid-single-digit traffic growth and a robust marketing calendar. Internationally, comparable sales rose by 4.2%, with net restaurant growth at 8.4%, contributing to an 11.6% system-wide sales increase. The company plans to maintain mid-4% net restaurant growth for 2024, with development ramping up in the second half of the year. Additionally, they have committed to a $300 million investment to remodel 1,100 Burger King restaurants, aiming to achieve between 85% and 90% modern image by 2028. The guidance for 2024 includes segment G&A between $665 million and $685 million and consolidated CapEx of around $300 million.

Restaurant BrndLP Financial Statement Overview

Summary

Restaurant BrndLP demonstrates strong revenue growth and efficient cost management. The company maintains healthy operating margins and has significantly improved its debt-to-equity ratio. However, a slight decrease in net profit margin and a relatively low equity ratio present some risks.

Income Statement

Very Positive

Restaurant BrndLP demonstrates strong revenue growth with a 19.72% increase from the previous year. The gross profit margin is robust at 100%, indicating efficient cost management. However, the net profit margin decreased slightly to 12.15% from 16.94%, which suggests some pressure on profitability. Both EBIT and EBITDA margins are healthy at 28.78%, reflecting strong operating performance.

Balance Sheet

Positive

The company maintains a stable equity position with an equity ratio of 12.63%. The debt-to-equity ratio improved significantly to 0.64, indicating reduced leverage risk. Return on equity increased to 32.82%, showcasing efficient use of equity to generate profits. However, the relatively low equity ratio suggests potential vulnerabilities if liabilities increase.

Cash Flow

Positive

Free cash flow grew by 8.24%, indicating positive cash generation. The operating cash flow to net income ratio is 1.47, suggesting strong cash conversion from profits. The free cash flow to net income ratio stands at 1.28, reflecting sufficient free cash flow to support net income. While growth is positive, the company should focus on maintaining cash flow growth to support future investments.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
8.41B	7.02B	6.50B	5.74B	4.97B
	Gross Profit
3.02B	2.80B	2.60B	2.40B	2.83B
	EBIT
2.42B	2.05B	1.90B	1.88B	1.42B
	EBITDA
2.66B	2.24B	2.21B	2.13B	1.78B
	Net Income Common Stockholders
1.02B	1.19B	1.48B	1.25B	750.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.33B	1.14B	1.18B	1.09B	1.56B
	Total Assets
24.63B	23.39B	22.75B	23.25B	22.78B
	Total Debt
15.96B	14.52B	14.30B	14.41B	13.90B
	Net Debt
14.62B	13.38B	13.13B	13.33B	12.35B
	Total Liabilities
19.79B	18.66B	18.48B	19.39B	19.06B
	Stockholders Equity
3.11B	2.87B	2.50B	2.24B	2.17B
Cash Flow		Free Cash Flow
1.30B	1.20B	1.39B	1.62B	804.00M
	Operating Cash Flow
1.50B	1.32B	1.49B	1.73B	921.00M
	Investing Cash Flow
-660.00M	11.00M	-64.00M	-1.10B	-79.00M
	Financing Cash Flow
-625.00M	-1.37B	-1.31B	-1.09B	-821.00M

Restaurant BrndLP Technical Analysis

Technical Analysis Sentiment

Positive

Last Price99.08

Price Trends

50DMA

93.83

Positive

100DMA

93.09

Positive

200DMA

94.15

Positive

Market Momentum

MACD

1.60

Positive

RSI

57.97

Neutral

STOCH

41.96

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:QSP.UN, the sentiment is Positive. The current price of 99.08 is above the 20-day moving average (MA) of 97.86, above the 50-day MA of 93.83, and above the 200-day MA of 94.15, indicating a bullish trend. The MACD of 1.60 indicates Positive momentum. The RSI at 57.97 is Neutral, neither overbought nor oversold. The STOCH value of 41.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:QSP.UN.

Restaurant BrndLP Risk Analysis

Restaurant BrndLP disclosed 34 risk factors in its most recent earnings report. Restaurant BrndLP 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 BrndLP Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QSP.UN	73 Outperform	C$44.90B	24.11	27.52%	3.34%	21.63%	-9.39%
Sector *	62 Neutral	$6.83B	11.28	2.95%	3.88%	2.70%	-24.56%
QSR		$32.57B	24.28	31.29%	3.33%	―	―
DLMAF		$35.82B	42.74	152.86%	0.21%	―	―
PZRIF		$360.41M	16.02	10.29%	6.18%	―	―
ODD	49 Neutral	C$19.69M	―		―	-6.91%	31.42%
MTYFF		$686.61M	129.60	1.11%	2.90%	―	―

* Consumer Cyclical Sector Average

Performance Comparison

TSE:QSP.UN

Restaurant BrndLP

99.08

6.88

7.46%

QSR

Restaurant Brands International

71.30

4.87

7.33%

DLMAF

Dollarama

129.00

37.20

40.52%

PZRIF

Pizza Pizza Royalty

10.85

1.82

20.16%

TSE:ODD

Odd Burger Corporation

0.24

0.07

41.18%

MTYFF

MTY Food Group

30.24

-2.86

-8.64%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.