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Restaurant Brands (QSR) Q4 Earnings Top Estimates, Stock Up

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Restaurant Brands International, Inc. (QSR - Free Report) reported fourth-quarter 2019 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line also increased year over year, buoyed by solid organic growth across the business. Following the results, the company’s shares increased 2.7% on Feb 10.

The company’s adjusted earnings came in at 75 cents per share, which beat the Zacks Consensus Estimate of 73 cents and rose 10.3% from the year-ago quarter’s reported figure. Total revenues of $1,479 million beat the consensus mark of $1,461 million by 1.3%. The said figure also increased 6.8% from the year-ago quarter’s figure, courtesy of increased system-wide sales in Burger King and Popeyes.

Notably, the company continues to make progress on its key investment project that includes remodeling programs and digital construction.

Restaurant Brands International Inc. Price, Consensus and EPS Surprise


Restaurant Brands International Inc. Price, Consensus and EPS Surprise

Restaurant Brands International Inc. price-consensus-eps-surprise-chart | Restaurant Brands International Inc. Quote


Segmental Revenues

Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.

Revenues at Tim Hortons totaled $872 million compared with $852 million in the prior-year quarter. However, system-wide sales declined 2.9% from the prior-year quarter’s levels. Comps in this segment declined 4.3% against 1.9% growth in the prior-year quarter. Nonetheless, with focus on its fundamentals and founding values, the brand is optimistic regarding its business prospects in Canada.

Burger King’s revenues grew from $427 million in fourth-quarter 2018 to $462 million in the quarter under review, primarily on solid system-wide sales growth in markets including France, Spain, Korea, China, Brazil and Mexico. Also, system-wide sales rose 8.4% from the year-ago quarter’s figure. Comps in this segment increased 2.8% compared with 1.7% growth in the prior-year quarter. In the fourth quarter, net restaurant growth was recorded at 5.9%.

Popeye’s Louisiana Kitchen, reported revenues of $145 million compared with $106 million in the year-ago quarter. System-wide sales rose 42.3% from the prior-year quarter’s level, owing to net restaurant growth of 6.9% and 34.4% rise in comps. Notably, system-wide sales growth compared favorably with the prior-year quarter’s 6.3% increase.

Operating Performance

In the quarter under review, the company’s adjusted EBITDA rose 7.2%, driven by increased sales growth at Burger King and Popeyes. Segment-wise, Tim Horton’s EBITDA declined 0.1% from the year-ago quarter’s tally. Burger King’s EBITDA increased 7.7% year over year. Popeye’s EBITDA also surged 62.4% from the year-ago quarter’s levels.

Cash and Capital

Restaurant Brands ended the fourth quarter with cash and cash equivalent balance of $1,533 million. As of Dec 31, 2019, its total debt was $12.3 billion. The company’s board of directors declared a dividend of 52 cents per common share and partnership exchangeable unit of RBI LP for first-quarter 2020. The dividend is payable on April 3, 2020 to its shareholders of record at the close of business as of March 16, 2020.

2019 Highlights

In 2019, total revenues amounted to $5,603 million, up 4.6% year over year.

Adjusted earnings per share (EPS) for the year ended Dec 31, 2019 was reported at $2.72 compared with $2.63 in 2018.

Adjusted EBITDA increased 4.2% to $2,304 million for the year ended Dec 31, 2019, compared with $2,212 million reported a year ago.

Other Developments

Restaurant Brands has made considerable progress with respect to its Canadian distribution centers in 2019.  The company continues to make progress on key investment projects, including the expansion of our Tim Hortons supply chain network in Canada as well as the remodel programs at both Tim Hortons and Burger King. The company expects to finish the project by the second half of 2020.

Notably, the completion will increase the distribution coverage from about 75% to nearly 90%, leading to reduced complexity in deliveries.

Moreover, the company also plans to modernize the drive-through experience by deploying outdoor digital menu boards through the majority of its drive-through locations.

Zacks Rank & Key Picks

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.

Few top-ranked stocks from the same space include Denny's Corporation DENN, Ruth's Hospitality Group, Inc. RUTH and Brinker International, Inc. EAT. Denny's and Ruth's Hospitality sport a Zacks Rank #1, while Brinker International carries a Zacks Rank #2 (Buy).

Denny’s has trailing four-quarter positive earnings surprise of 19.5%, on average

Ruth's Hospitality has three-five year expected EPS growth rate of 13.5%.

Brinker International 2020 earnings are expected to rise 10.2%

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