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Factors Influencing Restaurant Brands' (QSR) Q1 Earnings

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Restaurant Brands International Inc. (QSR - Free Report) is scheduled to report first-quarter 2018 results on Apr 24, before market opens. Last quarter, earnings surpassed the Zacks Consensus Estimate by 15.8%, the average trailing four-quarter beat being 12.6%.

What to Expect?

The Zacks Consensus Estimate for the quarter under review is pegged at 56 cents, up 55.6% from the prior-year quarter. Notably, the consensus estimate for the quarter remained stable over the past 30 days. Moreover, analysts polled by Zacks expect revenues of nearly $1,125 million, up 12.5% from the prior-year quarter.

Let’s take a look at how the company’s top and bottom lines will shape up in the to-be-reported quarter.

Sales-Building Efforts to Boost Results

Restaurant Brands is likely to report both top- and bottom-line growth in the quarter under review. Various sales-boosting initiatives like improving services, reimaging restaurants, menu innovation and continued expansion bode well. According to the company, it will continue to focus on new product development in 2018 and beyond. This is because product launch is a key to its brands’ long-term success. This is expected to drive traffic by expanding the customer base, spreading out into new dayparts and consistent efforts to build brand leadership in food quality and taste.

Meanwhile, the acquisition of Popeyes Louisiana Kitchen will continue to drive the company’s performance. This buyout is likely to aid in cutting costs, thus proving accretive to the quarter’s earnings. In addition, Restaurant Brands debuted its TIM’s mobile app — which offers mobile order and pre-pay — in 2017 and continues to make improvements in it based on feedbacks. The company also aims to continue adopting similar initiatives to drive sales.

Furthermore, Restaurant Brands sees substantial opportunity to grow its brands in existing markets as well as new markets. Also, it continues to expand and speed up development of all the three brands by establishing master franchisees with exclusive development rights and joint ventures coupled with new and existing franchisees across the globe.

However, lingering uncertainties in various international markets where it operates remain a major cause of concerns for the company. Continued softness in Western Canada is also likely to impact sales growth at Tim Hortons, which has a majority of its base in the region.

Restaurant Brands International Inc. Price, Consensus and EPS Surprise

What Does the Zacks Model Unveil?

Our proven model does not show that Restaurant Brands is likely to beat earnings estimates 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Restaurant Brands has an Earnings ESP of -0.89%. Although, the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Stocks to Consider

Here are a few other stocks from the Restaurant space that investors may consider, as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Ruth's Hospitality Group, Inc. (RUTH - Free Report) has an Earnings ESP of +1.70% and a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.

Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank of 3.

Brinker International, Inc. (EAT - Free Report) has an Earnings ESP of +1.62% and a Zacks Rank #3.

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