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Restaurant Brands (QSR) Up 8.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have added about 8.1% 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 the most recent earnings report in order to get a better handle on the important drivers.
Restaurant Brands Q4 Earnings & Revenues Top Estimates
Restaurant Brands reported fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Earnings & Revenue Discussion
In the quarter under review, QSR reported adjusted earnings per share (EPS) of 75 cents, surpassing the Zacks Consensus Estimate of 73 cents. The bottom line increased 4.5% from 72 cents reported in the prior-year quarter.
Quarterly net revenues of $1.82 billion beat the consensus mark of $1.8 billion. The top line increased 7.8% on a year-over-year basis. The upside was driven by strong system-wide sales growth and the passing on of elevated commodity prices to franchisees. On a reported basis, this was partially offset by unfavorable FX movements.
During the quarter, global system-wide sales rose 9.6% year over year.
Segmental Revenues
Restaurant Brands operates through five segments — Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS) and International (INTL).
In the fourth quarter, revenues from Tim Hortons totaled $1.02 billion, up 3.2% from the prior-year quarter’s levels. System-wide sales rose 9% year over year compared with 10.5% growth reported in the prior-year quarter. Comps rose 8.4% year over year compared with 10.1% a year ago. Net restaurant growth was 0.1% year over year against a 1.1% fall reported in the prior-year quarter.
Burger King’s revenues amounted to $345 million, indicating 11% growth from the year-ago quarter’s levels. System-wide sales rose 4.9% year over year compared with 5.5% growth reported in the prior-year quarter. Comps climbed 6.3% year over year compared with 5% growth in the year-earlier quarter. Net restaurant growth was down 3.3% year over year compared with a 0.6% fall reported in the prior-year quarter.
Popeyes Louisiana Kitchen generated revenues of $182 million, up 12.4% from the prior-year levels. System-wide sales growth came in at 11.2% year over year compared with 6.5% growth reported in the prior-year quarter. Comps rose 5.5% year over year compared with 1.7% growth reported in the prior-year quarter. Net restaurant growth was 4.9% year over year compared with 6.7% growth a year ago.
Firehouse Subs recorded revenues of $51 million, up 41.9% from the year-earlier levels. System-wide sales growth was 7.8% compared with 6.9% reported in the previous quarter. Net restaurant growth was 3% compared with 2.4% in the prior year quarter. Comps rose 3.5% year over year.
Fourth-quarter revenues from the International segment came in at $224 million, up 15.8% year over year. System-wide sales growth came in at 12.8% year over year compared with 18.5% growth reported in the prior-year quarter. Comps grew 4.6% year over year compared with 10.5% growth reported in the prior-year quarter. Net restaurant growth was 8.9% year over year compared with a 9.1% increase a year ago.
Operating Performance
During the quarter, adjusted EBITDA amounted to $603 million compared with $588 million reported in the prior-year quarter. On a reported basis, the upside was driven by increases in TH, FHS, PLK and INTL Adjusted EBITDA. However, this was partially offset by a fall in BK Adjusted EBITDA.
Segment-wise, Tim Horton’s adjusted EBITDA increased 3.2% year over year to $271 million. Burger King’s adjusted EBITDA fell 17.8% year over year to $87 million. Popeye’s adjusted EBITDA came in at $66 million, up 10.2% year over year. During the quarter, adjusted EBITDA from the Firehouse Subs came in at $15 million, up 23.2% year over year. Adjusted EBITDA in the International segment came in at $164 million, up 11.5% year over year.
Cash and Capital
Restaurant Brands ended fourth-quarter 2023 with a cash and cash equivalent balance of $1.1 billion compared with $1.2 million at 2022 end. As of Dec 31, 2023, long-term debt (net of current portion) was $12.9 billion compared with $12.8 billion as of 2022-end.
2023 Highlights
Total revenues in 2023 amounted to $7 billion compared with $6.5 billion reported in 2022.
Adjusted EBITDA in 2023 came in at $2.6 billion compared with $2.4 billion in 2022.
In 2023, adjusted diluted EPS came in at $3.24 per share compared with $3.14 reported in the previous year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Restaurant Brands has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 has been net zero. 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, Brinker International (EAT - Free Report) , a stock from the same industry, has gained 10.8%. The company reported its results for the quarter ended December 2023 more than a month ago.
Brinker International reported revenues of $1.07 billion in the last reported quarter, representing a year-over-year change of +5.4%. EPS of $0.99 for the same period compares with $0.76 a year ago.
For the current quarter, Brinker International is expected to post earnings of $1.13 per share, indicating a change of -8.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Brinker International. Also, the stock has a VGM Score of A.
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Restaurant Brands (QSR) Up 8.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have added about 8.1% 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 the most recent earnings report in order to get a better handle on the important drivers.
Restaurant Brands Q4 Earnings & Revenues Top Estimates
Restaurant Brands reported fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Earnings & Revenue Discussion
In the quarter under review, QSR reported adjusted earnings per share (EPS) of 75 cents, surpassing the Zacks Consensus Estimate of 73 cents. The bottom line increased 4.5% from 72 cents reported in the prior-year quarter.
Quarterly net revenues of $1.82 billion beat the consensus mark of $1.8 billion. The top line increased 7.8% on a year-over-year basis. The upside was driven by strong system-wide sales growth and the passing on of elevated commodity prices to franchisees. On a reported basis, this was partially offset by unfavorable FX movements.
During the quarter, global system-wide sales rose 9.6% year over year.
Segmental Revenues
Restaurant Brands operates through five segments — Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS) and International (INTL).
In the fourth quarter, revenues from Tim Hortons totaled $1.02 billion, up 3.2% from the prior-year quarter’s levels. System-wide sales rose 9% year over year compared with 10.5% growth reported in the prior-year quarter. Comps rose 8.4% year over year compared with 10.1% a year ago. Net restaurant growth was 0.1% year over year against a 1.1% fall reported in the prior-year quarter.
Burger King’s revenues amounted to $345 million, indicating 11% growth from the year-ago quarter’s levels. System-wide sales rose 4.9% year over year compared with 5.5% growth reported in the prior-year quarter. Comps climbed 6.3% year over year compared with 5% growth in the year-earlier quarter. Net restaurant growth was down 3.3% year over year compared with a 0.6% fall reported in the prior-year quarter.
Popeyes Louisiana Kitchen generated revenues of $182 million, up 12.4% from the prior-year levels. System-wide sales growth came in at 11.2% year over year compared with 6.5% growth reported in the prior-year quarter. Comps rose 5.5% year over year compared with 1.7% growth reported in the prior-year quarter. Net restaurant growth was 4.9% year over year compared with 6.7% growth a year ago.
Firehouse Subs recorded revenues of $51 million, up 41.9% from the year-earlier levels. System-wide sales growth was 7.8% compared with 6.9% reported in the previous quarter. Net restaurant growth was 3% compared with 2.4% in the prior year quarter. Comps rose 3.5% year over year.
Fourth-quarter revenues from the International segment came in at $224 million, up 15.8% year over year. System-wide sales growth came in at 12.8% year over year compared with 18.5% growth reported in the prior-year quarter. Comps grew 4.6% year over year compared with 10.5% growth reported in the prior-year quarter. Net restaurant growth was 8.9% year over year compared with a 9.1% increase a year ago.
Operating Performance
During the quarter, adjusted EBITDA amounted to $603 million compared with $588 million reported in the prior-year quarter. On a reported basis, the upside was driven by increases in TH, FHS, PLK and INTL Adjusted EBITDA. However, this was partially offset by a fall in BK Adjusted EBITDA.
Segment-wise, Tim Horton’s adjusted EBITDA increased 3.2% year over year to $271 million. Burger King’s adjusted EBITDA fell 17.8% year over year to $87 million. Popeye’s adjusted EBITDA came in at $66 million, up 10.2% year over year. During the quarter, adjusted EBITDA from the Firehouse Subs came in at $15 million, up 23.2% year over year. Adjusted EBITDA in the International segment came in at $164 million, up 11.5% year over year.
Cash and Capital
Restaurant Brands ended fourth-quarter 2023 with a cash and cash equivalent balance of $1.1 billion compared with $1.2 million at 2022 end. As of Dec 31, 2023, long-term debt (net of current portion) was $12.9 billion compared with $12.8 billion as of 2022-end.
2023 Highlights
Total revenues in 2023 amounted to $7 billion compared with $6.5 billion reported in 2022.
Adjusted EBITDA in 2023 came in at $2.6 billion compared with $2.4 billion in 2022.
In 2023, adjusted diluted EPS came in at $3.24 per share compared with $3.14 reported in the previous year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Restaurant Brands has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 has been net zero. 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, Brinker International (EAT - Free Report) , a stock from the same industry, has gained 10.8%. The company reported its results for the quarter ended December 2023 more than a month ago.
Brinker International reported revenues of $1.07 billion in the last reported quarter, representing a year-over-year change of +5.4%. EPS of $0.99 for the same period compares with $0.76 a year ago.
For the current quarter, Brinker International is expected to post earnings of $1.13 per share, indicating a change of -8.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Brinker International. Also, the stock has a VGM Score of A.