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Restaurant Brands (QSR) Up 4.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Restaurant Brands due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Restaurant Brands Q1 Earnings Miss Estimates, Up Y/Y
Restaurant Brands reported mixed first-quarter 2019 results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Both the top and bottom line increased on a year-over-year basis.
Adjusted earnings of 55 cents per share lagged the Zacks Consensus Estimate of 59 cents but increased 16.7% from the year-ago quarter number. This uptick can be primarily attributed to a consistent improvement in the company’s top line.
Total revenues came in at $1,266 million, which outpaced the consensus mark of $1,260 million. The metric also improved 1% from the year-ago quarter figure, courtesy of increased system-wide sales across the company’s brands.
Segmental Revenues
Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.
Revenues at Tim Hortons totaled $749 million compared with $763 million in the prior-year quarter. However, system-wide sales increased 0.5% on the back of net restaurant growth. Meanwhile, comps at this segment declined 0.6% compared with 0.3% decrease in the prior-year quarter.
Burger King’s revenues increased from $390 million in first-quarter 2018 to $411 million in the quarter under review, mainly driven by increased franchise and property revenues. Also, system-wide sales rose 8.2%, narrower than 11.3% growth registered in the year-ago comparable period and an 8.4% increase in the last reported quarter. System-wide sales growth can be attributed to net restaurant growth of 5.7% and positive comps growth.
Comps grew 2.2% compared with 3.8% growth in the prior-year quarter and a 1.7% increase in the last reported quarter.
Popeye’s Louisiana Kitchen, which was acquired on Mar 27, 2017, reported revenues of $106 million compared with $101 million in the year-ago quarter.
System-wide sales rose 6.8% owing to net restaurant growth of 6.6% and comps growth of 0.6%. Notably, system-wide sales growth compared unfavorably with prior-year quarter’s 10.9% increase. Comparable sales too compared unfavorably with the year-ago quarter’s comps growth of 3.2%.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA rose 0.5% on an organic basis driven by system-wide sales growth. Segment-wise, Tim Horton’s EBITDA declined 3.3%. Burger King’s EBITDA grew 3.9% year over year. Popeye’s EBITDA was up 5.4%.
Cash and Capital
Restaurant Brands exited the first quarter with cash and cash equivalent balance of $902 million. As of Mar 31, 2019, total debt was $12.3 billion. The company’s board of directors declared a dividend of 50 cents per share for the second quarter of 2019, payable Jul 3, to its shareholders of record at the close of business as of Jun 15.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
VGM Scores
Currently, Restaurant Brands has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Restaurant Brands has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Restaurant Brands (QSR) Up 4.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Restaurant Brands (QSR - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Restaurant Brands due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Restaurant Brands Q1 Earnings Miss Estimates, Up Y/Y
Restaurant Brands reported mixed first-quarter 2019 results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Both the top and bottom line increased on a year-over-year basis.
Adjusted earnings of 55 cents per share lagged the Zacks Consensus Estimate of 59 cents but increased 16.7% from the year-ago quarter number. This uptick can be primarily attributed to a consistent improvement in the company’s top line.
Total revenues came in at $1,266 million, which outpaced the consensus mark of $1,260 million. The metric also improved 1% from the year-ago quarter figure, courtesy of increased system-wide sales across the company’s brands.
Segmental Revenues
Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.
Revenues at Tim Hortons totaled $749 million compared with $763 million in the prior-year quarter. However, system-wide sales increased 0.5% on the back of net restaurant growth. Meanwhile, comps at this segment declined 0.6% compared with 0.3% decrease in the prior-year quarter.
Burger King’s revenues increased from $390 million in first-quarter 2018 to $411 million in the quarter under review, mainly driven by increased franchise and property revenues. Also, system-wide sales rose 8.2%, narrower than 11.3% growth registered in the year-ago comparable period and an 8.4% increase in the last reported quarter. System-wide sales growth can be attributed to net restaurant growth of 5.7% and positive comps growth.
Comps grew 2.2% compared with 3.8% growth in the prior-year quarter and a 1.7% increase in the last reported quarter.
Popeye’s Louisiana Kitchen, which was acquired on Mar 27, 2017, reported revenues of $106 million compared with $101 million in the year-ago quarter.
System-wide sales rose 6.8% owing to net restaurant growth of 6.6% and comps growth of 0.6%. Notably, system-wide sales growth compared unfavorably with prior-year quarter’s 10.9% increase. Comparable sales too compared unfavorably with the year-ago quarter’s comps growth of 3.2%.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA rose 0.5% on an organic basis driven by system-wide sales growth. Segment-wise, Tim Horton’s EBITDA declined 3.3%. Burger King’s EBITDA grew 3.9% year over year. Popeye’s EBITDA was up 5.4%.
Cash and Capital
Restaurant Brands exited the first quarter with cash and cash equivalent balance of $902 million. As of Mar 31, 2019, total debt was $12.3 billion. The company’s board of directors declared a dividend of 50 cents per share for the second quarter of 2019, payable Jul 3, to its shareholders of record at the close of business as of Jun 15.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
VGM Scores
Currently, Restaurant Brands has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Restaurant Brands has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.