Restaurant Brands International (NYSE:QSR), the company behind such names as Burger King, Popeye's Louisiana Chicken, and Tim Hortons, looks a bit cheap.
Indeed, truly remarkable value is harder to come by on the S&P 500 these days. Even fast-food firms feeling the pressure of the latest Delta-driven COVID-19 surge don't come cheap these days.
Although Restaurant Brands has been a relative laggard of late, I remain optimistic about its trajectory from here and think the name is more than capable of catching up to its more expensive, better-performing competitors in the space. As such, I am bullish on QSR stock. (See QSR stock charts on TipRanks)
Restaurant Brands Trails the Pack
Despite ongoing COVID-19 pandemic-related disruptions, industry leaders like McDonald's (NYSE:MCD) and Chipotle Mexican Grill (NYSE:CMG) are still near their respective all-time highs, while QSR stock is still down over 20% from its all-time high.
What has McDonald's and Chipotle done right?
Each firm has focused on the things they could control in spite of dire circumstances. Whether we're talking about McDonald's and its celebrity collaborations, or Chipotle and its mighty delivery push, it's clear that both companies are capable of thriving, even if these on-and-off pandemic restrictions continue.
Of course, once this pandemic goes endemic, restaurant stocks across the board will stand to benefit. Until then, the formula for a rising fast-food stock is all about which firm has perfected the so-called "Three Ds": delivery, drive-thru, and digital apps (loyalty), and less about the fourth D: dining rooms.
Menu Innovation
Burger King recently announced its intent to ban 124 artificial ingredients from its menu. The burger giant is really pushing for a healthy reputation. It may very well give Chipotle something to worry about as it makes the push.
Popeye's, with its successful sandwich and Tim Hortons, with its new seasonal product categories, could also move the needle higher for QSR stock.
Wall Street's Take
According to TipRanks’ analyst rating consensus, QSR stock comes in as a Moderate Buy. Out of 15 analyst ratings, there are nine Buys, five Holds, and one Sell.
The average QSR price target is $74.04. Analyst price targets range from a low of $59 per share, to a high of $86 per share.
Disclosure: Joey Frenette owned shares of Restaurant Brands and McDonald's at the time of publication.
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