Restaurant Brands (QSR) Q3 Earnings Match Estimates, Up Y/Y

Restaurant Brands International, Inc. (NYSE:QSR) reported mixed third-quarter 2019 results, wherein earnings were in line with the Zacks Consensus Estimate but revenues lagged the same.

The company’s adjusted earnings came in at 72 cents per share, which grew 14.3% from the year-ago quarter. This uptick can be primarily attributed to consistent improvement in Restaurant Brands' top line.

Total revenues were $1,458 million, which lagged the consensus mark of $1,462 million. Its top line missed the consensus estimate after beating the same in the preceding three quarters. However, the metric improved 6% from the year-ago quarter figure, courtesy of increased system-wide sales across its brands.

Notably, Restaurant Brands looks forward to open its first super urban location. It continues making progress on its key investment project that includes remodeling pipelines and construction projects.

Segmental Revenues

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

Revenues at Tim Hortons totaled $881 million compared with $854 million in the prior-year quarter. However, system-wide sales declined 1.1% from the prior-year quarter. Comps at this segment decreased 1.4% compared with 0.6% decline in the prior-year quarter. Nonetheless, the brand remains confident of its Winning Together Plan and prospects of the business in Canada appear bright.

Burger King’s revenues grew from $416 million in third-quarter 2018 to $457 million in the quarter under review, mainly driven by increased franchise and property revenues. Also, system-wide sales rose 8.4% from the year-ago quarter. Notably, system-wide sales improvement was 10.7% compared with 7.8% in the prior-year quarter, owing to net restaurant growth of 5.8%. The brand achieved its highest comparable sales growth since 2015 during the quarter, wherein comps grew 4.8% from 1% rise in the prior-year period.

Popeye’s Louisiana Kitchen, which was acquired on Mar 27, 2017, reported revenues of $120 million compared with $105 million in the year-ago quarter. System-wide sales rose 15.4% from the prior-year period, owing to net restaurant growth of 5.6% and 9.7% rise in comps. Notably, system-wide sales growth compared favorably with the prior-year quarter’s 7.9% increase. Popeye’s also reported its strongest comparable sales growth of 9.7% after nearly two decades. This compares favorably with year-ago quarter’s increase of 0.5%.

Restaurant Brands International Inc. Price, Consensus and EPS Surprise

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

Operating Performance

In the quarter under review, the company’s adjusted EBITDA rose 5.4% on an organic basis, driven by system-wide sales growth. Segment-wise, Tim Horton’s EBITDA rose 0.7% from the year-ago period. Burger King’s EBITDA also grew 10% year over year. Popeye’s EBITDA was up 12.3% from a year ago.

Cash and Capital

Restaurant Brands ended the third quarter with cash and cash equivalent balance of $1,732 million. As of Sep 30, 2019, its total debt was $12.8 billion. The company’s board of directors declared a dividend of $0.5 per common share for fourth-quarter 2019, payable on Jan 3, 2020 to its shareholders of record at the close of business as of Dec 17, 2019.

Zacks Rank & Key Picks

Restaurant Brands currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the Restaurant space include Chuy's Holdings, Inc. (NASDAQ:CHUY) , Brinker International, Inc. (NYSE:EAT) and Dunkin' Brands Group, Inc. (NASDAQ:DNKN) . Chuy’s sports a Zacks Rank #1(Strong Buy), while Brinker and Dunkin’ carry a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chuy’s has an impressive long-term earnings growth rate of 17.5%.

Brinker surpassed the Zacks Consensus Estimates in three of the trailing four quarters, with an average positive earnings surprise of 4.4%.

Dunkin’ Brands has an impressive long-term earnings growth rate of 9.8%.

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