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Can Restaurant Brands (QSR) Q3 Earnings Pull a Surprise?
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Restaurant Brands International Inc. (QSR - Free Report) is scheduled to report third-quarter 2016 numbers on Oct 24, before the opening bell.
Last quarter, Restaurant Brands posted a positive earnings surprise of 17.14%. In fact, the company has surpassed earnings estimates in each of the past four quarters, with an average beat of 20.07%.
Headquartered in Miami, FL, Restaurant Brands came into existence with the merger of Tim Hortons Inc. and Burger King Worldwide Inc. It is now the parent company of these two iconic quick service restaurant brands. These independently operated brands have been serving customers for more than 50 years.
Let’s see how things are shaping up for this announcement.
Comps at both the brands – Tim Hortons and Burger King – have shown considerable year-over-year improvement in the last few quarters backed by menu innovation, value meals, re-imaging and premium offerings. We expect these sales-boosting initiatives to aid third-quarter results as well.
We are also encouraged by the company’s augmented focus on enhancing guest experience and increasing franchisee profitability to create value for all of its stakeholders. Moreover, Restaurant Brands’ efforts to grow its global restaurant footprint at both its iconic brands should further boost the quarter’s performance.
However, costs incurred to establish both these brands in new markets and execute sales initiatives might dent the company’s profits in the to-be-reported quarter. Further, negative currency translation could keep earnings under pressure given the company’s substantial international exposure.
Earnings Whispers
Our proven model does not conclusively show that Restaurant Brands is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Restaurant Brands has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 41 cents.
Zacks Rank: Restaurant Brands has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
Buffalo Wild Wings Inc. has an Earnings ESP of +0.80% and a Zacks Rank #3.
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Can Restaurant Brands (QSR) Q3 Earnings Pull a Surprise?
Restaurant Brands International Inc. (QSR - Free Report) is scheduled to report third-quarter 2016 numbers on Oct 24, before the opening bell.
Last quarter, Restaurant Brands posted a positive earnings surprise of 17.14%. In fact, the company has surpassed earnings estimates in each of the past four quarters, with an average beat of 20.07%.
Headquartered in Miami, FL, Restaurant Brands came into existence with the merger of Tim Hortons Inc. and Burger King Worldwide Inc. It is now the parent company of these two iconic quick service restaurant brands. These independently operated brands have been serving customers for more than 50 years.
Let’s see how things are shaping up for this announcement.
RESTAURANT BRND Price and EPS Surprise
RESTAURANT BRND Price and EPS Surprise | RESTAURANT BRND Quote
Factors Likely to Influence this Quarter
Comps at both the brands – Tim Hortons and Burger King – have shown considerable year-over-year improvement in the last few quarters backed by menu innovation, value meals, re-imaging and premium offerings. We expect these sales-boosting initiatives to aid third-quarter results as well.
We are also encouraged by the company’s augmented focus on enhancing guest experience and increasing franchisee profitability to create value for all of its stakeholders. Moreover, Restaurant Brands’ efforts to grow its global restaurant footprint at both its iconic brands should further boost the quarter’s performance.
However, costs incurred to establish both these brands in new markets and execute sales initiatives might dent the company’s profits in the to-be-reported quarter. Further, negative currency translation could keep earnings under pressure given the company’s substantial international exposure.
Earnings Whispers
Our proven model does not conclusively show that Restaurant Brands is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Restaurant Brands has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 41 cents.
Zacks Rank: Restaurant Brands has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
The Wendy's Company (WEN - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
Buffalo Wild Wings Inc. has an Earnings ESP of +0.80% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>