They've never really performed in my view other than provide a modest dividend. Mr. Doyle is nearing the end of his second year leading a turnaround, yet it seems to me not much is turning around. I find it equally puzzling that this stock remains on a lot of recommendation lists and has for years.
I would like your perspective on the stock, its performance to date and where you see it headed over the next 3-5 years.
Thanks as always,
Dave
QSR is up 85.5% in the past 10 years. Not a stellar return, but reasonable. There was a lot of excitement with the management change, but higher costs and labour issues have offset much of the excitement. The last quarter was mixed; Looking ahead to Q3 (results out on Wednesday). Restaurant Brands' 3Q consolidated same-store sales may have improved vs. 2Q's 2.4% gain as year-over-year comparisons eased across all home and international markets. Burger King's gain may have been fueled by improved operations, value, remodels and family-based marketing activations. Faster speed of service and cold and espresso-based beverage growth likely boosted Tim Hortons' results. Popeyes may have seen a modest lift from better operations but results likely lagged behind Burger King and Tim Hortons. International same-store sales may have outperformed the US and Canada due to newer stores and less competition, and strong operations and value. But, QSR has missed 4 of the past five quarters, so investors tend to not believe its forecasts too much. At 18X earnings, we think it is priced OK. It may do better when the party in other sectors (i.e. tech) fades. Debt reamins very high, at about 7X cash flow, and we really think this is one reason investors are not supporting the stock much. Growth next year is expected to be about 10%. It has 34 analysts, with 20 at BUY, 13 HOLD and 1 SELL. We would consider it OK but agree it is not hugely compelling other than its relative safety and income. We do have it in our income portfolio but at a fairly low committment level.