Restaurant Brands International (QSR.TO)

The valuation assumes there's no growth here, but that's not true. Their CEO is applying best practices that he used when running Domino's Pizza by improving digital sales as they expand overseas, but are not as focused on China as peers.

They own brands, but some like Tim Horton's have fallen in quality. Also, they carry a lot of debt. Some of their brands are not that strong.

Large array of brands including Burger Kind/Tim Hortons. Company debt loads are too high for preference. Good job at managing company through M&A - however would prefer other options in the market. 

Challenged of late. Technicals are, at best, neutral. 200-day MA sideways, and stock's trading below it. When one segment does poorly, it puts a cloud over the entire company. Owns, but it's in the penalty box. He many take action given the technical structure. 17.5x forward PE for 10% growth, not expensive. Two-month GST holiday may help, but so far it hasn't.

Names in the restaurant industry and some companies that are considered “value names” have been under pressure recently. In addition, the weak revenue growth of QSR in recent quarters also compressed the valuation multiples of QSR from around 20x to 17.6x now. QSR has the lowest P/E among the restaurant royalty names like YUM, MCD, and DPZ.

We think QSR is a high-quality capital-light royalty name that is facing a near-term headwind; its valuation looks more decent than ever before. We think QSR continues to have a long runway for growth in the international markets, given its brand portfolio is still relatively underpenetrated in emerging markets. It could be considered within the top 10% of Canadian names in terms of business quality. That being said, the restaurant industry is fiercely competitive, so we would size the position appropriately.
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She scores it 6 out of 10 for value and fundamentals, and it's on her watch list. Likes it. Sees 11.5% upside. Analysts are mixed, though. A lot depends on the future economy---will benefit as interest rates decline and people eat out more.

Tough business. Tim's has benefited from return to office post-pandemic. Historically, management was intent on cost-cutting. Hadn't done much innovation or product investment, but now focusing on that. 

In the space, she owns MCD.

Tim Horton's is doing okay, but Popeye's and Burger King face problems. The latter is taking longer to revamp, but the locations they already changed see better comps. QSR can bounce back and can buy other companies.

Well positioned. Inflation's coming down. Demand for fast food is not going away. Obesity drugs won't be a permanent detriment to the space. Tim's is a cash cow, and that's what you want in terms of free cashflow generation.

Burger King was lower but Tim's did OK. Burger King's spending a lot of $$ to revamp stores, but seeing good returns from stores already renovated with foot traffic up about 4.3%. Great brands that they improve on. Decent dividend. Worthwhile owning here.

Discretionary spending is coming down and the whole restaurant business would turn down in a weaker economy. She likes trade down economics where consumers go to cheaper alternatives for the same product. For example if a coffee at Starbucks is too expensive then customers might choose a lower priced coffee at Tim Hortons..

Puzzling that stock's down, as Q1 results were quite strong, beating expectations and long-term guidance good. People are concerned about how low-income US consumer is going to be impacted by inflation. He recently went through the drive-thru and a Whopper is $8! 

Sees that a lot of chains are introducing value meals, which may get stock going again. Stock's really good value here.