Restaurant Brands International, Inc. (QSR - Free Report) reported mixed results in the second quarter of 2017, wherein the bottom line outpaced the Zacks Consensus Estimate while the top line marginally lagged the same.
In Feb 2017, Restaurant Brands inked a definitive agreement to acquire Popeye’s Louisiana Kitchen for $79.00 per share in cash, or $1.8 billion. The transaction closed on Mar 27, on completion of the customary closing conditions.
Consequently, Popeye’s revenues and segment income from Mar 28 through Jun 30 were included in Restaurant Brands’ results for the three-month period (ended Jun 30, 2017).
Earnings and Revenue Discussion
Adjusted earnings of 51 cents per share surpassed the Zacks Consensus Estimate of 45 cents by 13.3% and rose 24.4% year over year on higher revenues, partly offset by increased expenses.
Revenues of $1.13 billion increased nearly 9% year over year primarily owing to the inclusion of Popeye’s results as well as higher system-wide sales at both the Tim Hortons and the Burger King segments. However, revenues lagged the consensus mark of $1.14 billion by 0.5%.
Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Inside the Headline Numbers
Restaurant Brands operates through three segments – Tim Hortons, Burger King and the lately acquired Popeye’s Louisiana Kitchen.
Tim Hortons reported revenues of $772.3 million, reflecting a rise of 1.6% over the prior-year quarter, primarily owing to system-wide sales growth.
System-wide sales increased 2.6%, lower than 4.8% growth recorded in the year-ago comparable period, and 3.3% posted in the last quarter.
Comps at this segment declined 0.8% in the quarter versus 2.7% growth in the prior-year quarter and 0.1% decline in the preceding quarter.
Burger King’s revenues were up 4.7% from the prior-year quarter to $293.7 million, mainly on the back of system-wide sales growth.
System-wide sales rose 10.6%, much higher than 5.9% growth recorded in the year-ago comparable period, and 6.2% increase recorded in the preceding quarter.
Comps at the Burger King division grew 3.9% in the quarter versus 0.6% growth in the prior-year quarter, and 0.1% decline in the last quarter.
Popeye’s Louisiana Kitchen
Total revenue in this segment amounted to $66.7 million.
System-wide sales rose 3.3%, which was lower than 6.5% growth recorded in the prior-year quarter.
Meanwhile, comps at this division declined 2.7% comparing unfavorably with 0.7% growth recorded in the prior-year quarter, and 0.2% decline in the last quarter.
Zacks Rank & Peer Releases
Restaurant Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other restaurant stocks, McDonald's Corp. (MCD - Free Report) reported second-quarter adjusted earnings per share of $1.73 beating the Zacks Consensus Estimate of $1.62 by 6.79%. Earnings also increased 19% year over year.
Chipotle Mexican Grill, Inc.’s (CMG - Free Report) second-quarter adjusted earnings were $2.32 per share, which outpaced the Zacks Consensus Estimate of $2.16 by 7.41%. Also, earnings compared favorably with the year-ago quarter figure of 87 cents per share, given a substantial rise in revenues.
In the second quarter, Domino’s Pizza, Inc. (DPZ - Free Report) posted earnings of $1.32 per share that outpaced the Zacks Consensus Estimate of $1.22 by 8.20%. Further, earnings climbed 34.7% year over year on strong sales and a lower share count.
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