It has been about a month since the last earnings report for Restaurant Brands (QSR Quick QuoteQSR - Free Report) . Shares have lost about 9.5% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Restaurant Brands Q1 Earnings & Revenues Top Estimates

Restaurant Brands reported first-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. Although the bottom line declined on a year-over-year basis, the top line increased on the back of robust system-wide sales across its segments.

Earnings & Revenue Discussion

In the quarter under review, QSR reported adjusted earnings per share of 73 cents, surpassing the Zacks Consensus Estimate of 72 cents. The bottom line dropped 2% from 75 cents reported in the prior-year quarter.

Quarterly net revenues of $1.74 billion beat the consensus mark of $1.71 billion. The top line increased 9.4% on a year-over-year basis. The upside was driven by strong system-wide sales growth. On a reported basis, this was partially offset by unfavorable FX movements.

During the quarter, global system-wide sales rose 8.1% 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 first quarter, revenues from Tim Hortons totaled $939 million, up 5.1% from the prior-year quarter’s levels. System-wide sales rose 7.8% year over year compared with 16.1% growth reported in the prior-year quarter. Comps rose 6.9% year over year compared with 14.9% a year ago.

Burger King’s revenues amounted to $350 million, up 17.9% from the year-ago quarter’s levels. System-wide sales rose 2.6% year over year compared with 8.5% growth reported in the prior-year quarter. Comps climbed 3.8% year over year compared with 8.7% growth in the year-earlier quarter. Net restaurant growth was down 2.4% year over year compared with a 1.3% fall reported in the prior-year quarter.

Popeyes Louisiana Kitchen generated revenues of $178 million, up 11.5% from the prior-year levels. System-wide sales growth came in at 10.4% year over year compared with 9.6% growth reported in the prior-year quarter. Comps rose 5.7% year over year compared with 3.6% growth reported in the prior-year quarter. Net restaurant growth was 4.7% year over year compared with 6.3% growth a year ago.

Firehouse Subs recorded revenues of $50 million, up 33.9% from the year-earlier levels. System-wide sales growth was 4.3% compared with 8.7% reported in the prior-year quarter. Net restaurant growth was 3.6% compared with 2.2% in the prior-year quarter. Comps rose 0.3% year over year compared with 6.2% growth reported in the prior-year quarter.

First-quarter revenues from the International segment came in at $222 million, up 9.7% year over year. System-wide sales growth came in at 11.6% year over year compared with 21.6% growth reported in the prior-year quarter. Comps rose 4.2% year over year compared with 12.6% growth reported in the prior-year quarter. Net restaurant growth was 8.4% year over year compared with an 8.9% increase a year ago.

Operating Performance

During the quarter, adjusted EBITDA amounted to $627 million compared with $588 million reported in the prior-year quarter. On a reported basis, the upside was driven by increases in adjusted EBITDA across its segments.

Segment-wise, Tim Horton’s adjusted EBITDA increased 5.6% year over year to $262 million. Burger King’s adjusted EBITDA increased 8.9% year over year to $125 million. Popeye’s adjusted EBITDA came in at $67 million, up 13.7% year over year. During the quarter, adjusted EBITDA from the Firehouse Subs came in at $14 million, up 8.3% year over year. Adjusted EBITDA in the International segment came in at $159 million, up 3.9% year over year.

Cash and Capital

Restaurant Brands ended first-quarter 2024 with a cash and cash equivalent balance of $1 billion compared with $1.1 million at 2023-end. As of Mar 31, 2024, long-term debt (net of current portion) was $12.8 billion compared with $12.9 billion as of 2023-end.

QSR’s board of directors announced a dividend payout of 58 cents per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership in the second quarter of 2024. The dividend is payable on Jul 5, 2024, to shareholders of record at the close of business as of Jun 21, 2024.

Long-Term Guidance (2024-2028)

On Feb 15, 2024, the company unveiled its long-term consolidated performance expectations from 2024 to 2028. It anticipates achieving more than 3% growth in comparable sales and at least 5% net restaurant growth. QSR projects a system-wide sales growth exceeding 8%, with adjusted operating income expected to grow at a rate equal to or greater than the system-wide sales

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Restaurant Brands has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, 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 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.