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Why Is Restaurant Brands (QSR) Up 7.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Restaurant Brands due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Restaurant Brands Q4 Earnings Miss Estimates, Fall Y/Y
Restaurant Brands reported fourth-quarter 2020 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. However, the top and the bottom line declined on a year-over-year basis.
The company’s adjusted earnings of 53 cents per share missed the Zacks Consensus Estimate of 66 cents by 19.7%. Moreover, the bottom line fell 29.3% from the prior-year quarter’s figure of 75 cents.
During the fourth quarter, net revenues of $1,358 million surpassed the consensus mark of $1,345 million. However, the top line declined 8.2% on a year-over-year basis, primarily due to a drop in system-wide sales in the Tim Hortons, Burger King and Popeyes segments. This along with decline in supply chain sales was partially offset by favorable foreign exchange (FX) movements.
Segmental Revenues
Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.
During fourth-quarter 2020, revenues in Tim Hortons totaled $782 million compared with $872 million in the prior-year quarter. System-wide sales declined 12.9% compared with 2.9% fall in the prior-year quarter. Comps in the segment declined 11% compared with 4.3% fall in the prior-year quarter. The downtick was primarily caused by lower system-wide sales and supply chain sales. It was also negatively impacted by unfavorable FX movements. In the quarter, net restaurant growth was recorded at 0.3% compared with 1.8% in the prior-year quarter.
Burger King’s revenues totaled $434 million in fourth-quarter 2020 compared with $462 million in the prior-year quarter. The downside was primarily because of decline in system-wide sales along with negative FX movements. Also, system-wide sales declined 8.1% against 8.4% growth in the prior-year quarter. Comps in the segment also declined 7.9% against 2.8% growth in the prior-year quarter. In the fourth quarter, net restaurant growth was recorded at (1.1%) against growth of 5.9% reported in the prior-year quarter.
Popeye’s Louisiana Kitchen reported revenues of $142 million in the fourth quarter of 2020 compared with $145 million in the prior-year quarter. System-wide sales declined 0.9% against 42.3% increase recorded in the prior-year quarter. Meanwhile, net restaurant growth came in at 4.1% compared with 6.9% growth in the prior-year quarter. Comps in the segment fell 5.8% against 34.4% growth in the prior-year quarter.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA declined 19.5% year over year to $501 million. On an organic basis, the downside was primarily driven by a decline in Tim Hortons and Burger King adjusted EBITDA.
Segment-wise, Tim Horton’s adjusted EBITDA declined 22.9% from the year-ago quarter’s tally. Burger King’s adjusted EBITDA fell 18% year over year. Meanwhile, Popeye’s adjusted EBITDA fell 8.5% from the year-ago quarter’s levels.
Cash and Capital
Restaurant Brands ended the fourth quarter with cash and cash equivalent balance of $1,560 million compared with $1,533 million in the prior-year quarter. As of Dec 31, 2020, its total debt was approximately $13 billion compared with $12.3 billion as on Dec 31, 2019. The company’s board of directors announced a dividend of 53 cents per common share and partnership exchangeable unit of RBI LP for first-quarter 2021. The dividend is payable on Apr 6, 2021, to shareholders of record at the close of business as of Mar 23, 2021.
Other Updates
As of December-end, 96% of the company’s restaurants remained open worldwide that included all restaurants in North America and Asia Pacific. Meanwhile, 94% of the restaurants remained open in Europe, Middle East and Africa.
2020 Highlights
Total revenues in 2020 came in at $4,968 million compared with $5,603 million in 2019.
Adjusted EBITDA in 2020 came in at $1,864 compared with $2,304 in 2019.
In 2020, adjusted earnings per share (EPS) came in at $2.03 compared with $2.72 in the previous year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -6.83% due to these changes.
VGM Scores
At this time, Restaurant Brands has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Restaurant Brands has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Restaurant Brands (QSR) Up 7.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Restaurant Brands due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Restaurant Brands Q4 Earnings Miss Estimates, Fall Y/Y
Restaurant Brands reported fourth-quarter 2020 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. However, the top and the bottom line declined on a year-over-year basis.
The company’s adjusted earnings of 53 cents per share missed the Zacks Consensus Estimate of 66 cents by 19.7%. Moreover, the bottom line fell 29.3% from the prior-year quarter’s figure of 75 cents.
During the fourth quarter, net revenues of $1,358 million surpassed the consensus mark of $1,345 million. However, the top line declined 8.2% on a year-over-year basis, primarily due to a drop in system-wide sales in the Tim Hortons, Burger King and Popeyes segments. This along with decline in supply chain sales was partially offset by favorable foreign exchange (FX) movements.
Segmental Revenues
Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.
During fourth-quarter 2020, revenues in Tim Hortons totaled $782 million compared with $872 million in the prior-year quarter. System-wide sales declined 12.9% compared with 2.9% fall in the prior-year quarter. Comps in the segment declined 11% compared with 4.3% fall in the prior-year quarter. The downtick was primarily caused by lower system-wide sales and supply chain sales. It was also negatively impacted by unfavorable FX movements. In the quarter, net restaurant growth was recorded at 0.3% compared with 1.8% in the prior-year quarter.
Burger King’s revenues totaled $434 million in fourth-quarter 2020 compared with $462 million in the prior-year quarter. The downside was primarily because of decline in system-wide sales along with negative FX movements. Also, system-wide sales declined 8.1% against 8.4% growth in the prior-year quarter. Comps in the segment also declined 7.9% against 2.8% growth in the prior-year quarter. In the fourth quarter, net restaurant growth was recorded at (1.1%) against growth of 5.9% reported in the prior-year quarter.
Popeye’s Louisiana Kitchen reported revenues of $142 million in the fourth quarter of 2020 compared with $145 million in the prior-year quarter. System-wide sales declined 0.9% against 42.3% increase recorded in the prior-year quarter. Meanwhile, net restaurant growth came in at 4.1% compared with 6.9% growth in the prior-year quarter. Comps in the segment fell 5.8% against 34.4% growth in the prior-year quarter.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA declined 19.5% year over year to $501 million. On an organic basis, the downside was primarily driven by a decline in Tim Hortons and Burger King adjusted EBITDA.
Segment-wise, Tim Horton’s adjusted EBITDA declined 22.9% from the year-ago quarter’s tally. Burger King’s adjusted EBITDA fell 18% year over year. Meanwhile, Popeye’s adjusted EBITDA fell 8.5% from the year-ago quarter’s levels.
Cash and Capital
Restaurant Brands ended the fourth quarter with cash and cash equivalent balance of $1,560 million compared with $1,533 million in the prior-year quarter. As of Dec 31, 2020, its total debt was approximately $13 billion compared with $12.3 billion as on Dec 31, 2019. The company’s board of directors announced a dividend of 53 cents per common share and partnership exchangeable unit of RBI LP for first-quarter 2021. The dividend is payable on Apr 6, 2021, to shareholders of record at the close of business as of Mar 23, 2021.
Other Updates
As of December-end, 96% of the company’s restaurants remained open worldwide that included all restaurants in North America and Asia Pacific. Meanwhile, 94% of the restaurants remained open in Europe, Middle East and Africa.
2020 Highlights
Total revenues in 2020 came in at $4,968 million compared with $5,603 million in 2019.
Adjusted EBITDA in 2020 came in at $1,864 compared with $2,304 in 2019.
In 2020, adjusted earnings per share (EPS) came in at $2.03 compared with $2.72 in the previous year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -6.83% due to these changes.
VGM Scores
At this time, Restaurant Brands has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Restaurant Brands has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.