We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Restaurant Brands (QSR) Down 8.7% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have lost about 8.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Restaurant Brands due for a breakout? 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' Q2 Earnings Top Estimates, Rise Y/Y
Restaurant Brands reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by strong global comparable sales, unit growth and a healthy balance of traffic and check.
Earnings & Revenue Discussion
In the quarter under review, the company reported adjusted earnings per share (EPS) of 85 cents, surpassing the Zacks Consensus Estimate of 76 cents. The bottom line increased 3.7% from an adjusted EPS of 82 cents reported in the prior-year quarter.
Quarterly net revenues of $1,775 million surpassed the consensus mark of $1,746 million. The top line increased 8.3% on a year-over-year basis. The upside was driven by a rise in system-wide sales at Tim Hortons, Burger King, Popeyes and Firehouse Subs. However, this was partially offset by unfavorable FX movements.
During the quarter, global system-wide sales grew 14% year-over-year.
Segmental Revenues
Restaurant Brands operates through four segments — Tim Hortons, Burger King, Popeye’s Louisiana Kitchen and Firehouse Subs.
In the second quarter, revenues in Tim Hortons totaled $1,016 million, up 5% from the prior-year quarter’s levels. System-wide sales increased 15% year over year compared with growth of 16.3% reported in the prior-year quarter. Comps in the segment rose 11.4% year over year compared with a 12.2% rise reported in the year-ago quarter. In the quarter under review, net restaurant growth was recorded at 5.8% compared with an increase of 5.7% reported in the prior-year quarter.
During the quarter, Burger King’s revenues totaled $529 million, indicating growth of 11.8% from the prior-year quarter’s levels. System-wide sales growth in the segment increased 13.8% year over year compared with a 13.2% growth reported in the prior-year quarter. Comps rose 10.2% year over year compared with an 8.7% increase reported in the prior-year quarter. In the second quarter, net restaurant growth was 2.4% compared with an increase of 2.7% reported in the prior-year quarter.
Popeye’s Louisiana Kitchen generated revenues of $183 million in second-quarter 2023, up 10.9% from the prior-year quarter’s levels. System-wide sales growth came in at 15.0% year over year compared with a 9.9% growth recorded in the prior-year quarter. Comps in the segment rose 6.3% year over year against a 1.4% decline reported in the prior-year quarter. Net restaurant growth came in at 10.9% compared with an 8.1% growth reported in the prior-year quarter.
During the quarter, Firehouse Subs generated revenues of $48 million, indicating growth of 45.5% from the prior-year quarter’s levels. System-wide sales growth came in at 5.1% year over year compared with the 2.2% growth recorded in the previous quarter. Net restaurant growth came in at 2.1% year over year compared with an increase of 2.5% reported in the previous quarter. Comps in the segment rose 2.1% year over year compared with a 1.4% fall in the previous quarter.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA came in at $665 million compared with $618 million reported in the prior-year quarter. On a reported basis, the upside was driven by increases in BK, TH and PLK adjusted EBITDA. However, this was partially offset by unfavorable FX movements.
Segment-wise, Tim Horton’s adjusted EBITDA increased 5.8% year over year to $290 million. Burger King’s adjusted EBITDA increased 6.7% year over year to $288 million. Popeye’s adjusted EBITDA came in at $73 million, up 19.7% year over year. During the quarter, Firehouse Subs’ adjusted EBITDA increased 7.7% year over year to $14 million.
Cash and Capital
Restaurant Brands ended the second quarter with a cash and cash equivalent balance of $1,213 million compared with $1,178 million reported in 2022-end. As of Jun 30, 2023, long-term debt (net of current portion) stood at $12,801 million, compared with $12,839 million reported in 2022-end.
The company’s board of directors announced a dividend payout of 55 cents per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership in the second quarter of 2023. The dividend is payable on Oct 4, 2023, to shareholders of record at the close of business as of Sep 20, 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Restaurant Brands has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Restaurant Brands has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Restaurant Brands is part of the Zacks Retail - Restaurants industry. Over the past month, Chipotle Mexican Grill (CMG - Free Report) , a stock from the same industry, has gained 5.6%. The company reported its results for the quarter ended June 2023 more than a month ago.
Chipotle reported revenues of $2.51 billion in the last reported quarter, representing a year-over-year change of +13.6%. EPS of $12.65 for the same period compares with $9.30 a year ago.
For the current quarter, Chipotle is expected to post earnings of $10.42 per share, indicating a change of +9.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.8% over the last 30 days.
Chipotle has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Restaurant Brands (QSR) Down 8.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have lost about 8.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Restaurant Brands due for a breakout? 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' Q2 Earnings Top Estimates, Rise Y/Y
Restaurant Brands reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by strong global comparable sales, unit growth and a healthy balance of traffic and check.
Earnings & Revenue Discussion
In the quarter under review, the company reported adjusted earnings per share (EPS) of 85 cents, surpassing the Zacks Consensus Estimate of 76 cents. The bottom line increased 3.7% from an adjusted EPS of 82 cents reported in the prior-year quarter.
Quarterly net revenues of $1,775 million surpassed the consensus mark of $1,746 million. The top line increased 8.3% on a year-over-year basis. The upside was driven by a rise in system-wide sales at Tim Hortons, Burger King, Popeyes and Firehouse Subs. However, this was partially offset by unfavorable FX movements.
During the quarter, global system-wide sales grew 14% year-over-year.
Segmental Revenues
Restaurant Brands operates through four segments — Tim Hortons, Burger King, Popeye’s Louisiana Kitchen and Firehouse Subs.
In the second quarter, revenues in Tim Hortons totaled $1,016 million, up 5% from the prior-year quarter’s levels. System-wide sales increased 15% year over year compared with growth of 16.3% reported in the prior-year quarter. Comps in the segment rose 11.4% year over year compared with a 12.2% rise reported in the year-ago quarter. In the quarter under review, net restaurant growth was recorded at 5.8% compared with an increase of 5.7% reported in the prior-year quarter.
During the quarter, Burger King’s revenues totaled $529 million, indicating growth of 11.8% from the prior-year quarter’s levels. System-wide sales growth in the segment increased 13.8% year over year compared with a 13.2% growth reported in the prior-year quarter. Comps rose 10.2% year over year compared with an 8.7% increase reported in the prior-year quarter. In the second quarter, net restaurant growth was 2.4% compared with an increase of 2.7% reported in the prior-year quarter.
Popeye’s Louisiana Kitchen generated revenues of $183 million in second-quarter 2023, up 10.9% from the prior-year quarter’s levels. System-wide sales growth came in at 15.0% year over year compared with a 9.9% growth recorded in the prior-year quarter. Comps in the segment rose 6.3% year over year against a 1.4% decline reported in the prior-year quarter. Net restaurant growth came in at 10.9% compared with an 8.1% growth reported in the prior-year quarter.
During the quarter, Firehouse Subs generated revenues of $48 million, indicating growth of 45.5% from the prior-year quarter’s levels. System-wide sales growth came in at 5.1% year over year compared with the 2.2% growth recorded in the previous quarter. Net restaurant growth came in at 2.1% year over year compared with an increase of 2.5% reported in the previous quarter. Comps in the segment rose 2.1% year over year compared with a 1.4% fall in the previous quarter.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA came in at $665 million compared with $618 million reported in the prior-year quarter. On a reported basis, the upside was driven by increases in BK, TH and PLK adjusted EBITDA. However, this was partially offset by unfavorable FX movements.
Segment-wise, Tim Horton’s adjusted EBITDA increased 5.8% year over year to $290 million. Burger King’s adjusted EBITDA increased 6.7% year over year to $288 million. Popeye’s adjusted EBITDA came in at $73 million, up 19.7% year over year. During the quarter, Firehouse Subs’ adjusted EBITDA increased 7.7% year over year to $14 million.
Cash and Capital
Restaurant Brands ended the second quarter with a cash and cash equivalent balance of $1,213 million compared with $1,178 million reported in 2022-end. As of Jun 30, 2023, long-term debt (net of current portion) stood at $12,801 million, compared with $12,839 million reported in 2022-end.
The company’s board of directors announced a dividend payout of 55 cents per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership in the second quarter of 2023. The dividend is payable on Oct 4, 2023, to shareholders of record at the close of business as of Sep 20, 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Restaurant Brands has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Restaurant Brands has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Restaurant Brands is part of the Zacks Retail - Restaurants industry. Over the past month, Chipotle Mexican Grill (CMG - Free Report) , a stock from the same industry, has gained 5.6%. The company reported its results for the quarter ended June 2023 more than a month ago.
Chipotle reported revenues of $2.51 billion in the last reported quarter, representing a year-over-year change of +13.6%. EPS of $12.65 for the same period compares with $9.30 a year ago.
For the current quarter, Chipotle is expected to post earnings of $10.42 per share, indicating a change of +9.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.8% over the last 30 days.
Chipotle has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.