Restaurant Brands International (QSR-T)

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.

Has been watching company closely. Recent weakness in share price a good place to buy. Weakness in consumers beginning to rear its head. Higher interest rates playing a role in reduced consumer spending. If share price goes low enough - a good time to buy. Overall, a strong business. Would recommend buying below $80. 

All the names have been performing well. Improved profitability in 2023 sets the stage for continued growth going forward. Focusing on menu innovation and digital transformation through mobile apps. Franchise business model offers stability and good cashflow visibility. Track record of increasing dividends and share buybacks. Yield is 3.1%, expected to grow modestly over the next few years.

Chart shows ascending pattern of higher highs and higher lows, technically solid. Shares outpacing the TSX since mid-2022. Seeing a 9-10% earnings growth rate.