Restaurant Brands (QSR) Q3 Earnings Beat Estimates, Fall Y/Y
Restaurant Brands International, Inc. QSR reported third-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate, while revenues met the same. However, the top and the bottom line declined on a year-over-year basis.
The company’s adjusted earnings of 68 cents per share beat the Zacks Consensus Estimate of 62 cents by 9.7%. However, the bottom line fell 5.6% from the prior-year quarter’s figure of 72 cents.
Revenues during the third quarter of 2020 were in line with the consensus mark of $1,337 million. However, the top line declined 8.3% on a year-over-year basis, primarily due to a drop in system-wide sales at Tim Hortons and Burger King segments. This along with a decrease in supply chain sales was partially offset by an increase in system-wide sales at Popeye’s Louisiana Kitchen. Also, unfavorable foreign exchange (FX) movements added to the downside. Following the results, the company’s shares declined 3.6% during trading hours on Oct 28.
Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.
During the third quarter, revenues at Tim Hortons totaled $762 million compared with $881 million in the prior-year quarter. System-wide sales declined 13.7% compared with 0.1% fall in the prior-year quarter. Comps at this segment declined 12.5% compared with a 1.4% fall in the prior-year quarter. The decline was primarily led by lower system-wide sales. It was also negatively impacted by FX movements on a reported basis. In the quarter, net restaurant growth was recorded at 1% compared with 1.7% in the prior-year quarter.
Burger King’s revenues totaled $433 million in third-quarter 2020, compared with $457 million in the prior-year quarter. The decline was primarily because of decrease in system-wide sales along with negative FX movements on a GAAP basis. Also, system-wide sales declined 7.9% against 10.7% growth in the prior-year quarter. Comps in this segment also declined 7% against 4.8% growth in the prior-year quarter. In the third quarter, net restaurant growth was recorded at 2.4% compared with 5.8% in the prior-year quarter.
Popeye’s Louisiana Kitchen reported revenues of $142 million in the third quarter of 2020, compared with $120 million in the prior-year quarter. System-wide sales rose 21.5% compared with the prior-year quarter’s 15.6% increase. Meanwhile, net restaurant growth came in at 7.1% compared with 5.6% growth in the prior-year quarter. Comps at this segment rose 17.4% compared with 9.7% growth in the prior-year quarter.
In the quarter under review, the company’s adjusted EBITDA declined 6.6% year over year to $561 million primarily due to lower sales at Tim Hortons and Burger King, partially offset by an increase in Popeye’s sales. Segment-wise, Tim Horton’s adjusted EBITDA declined 14.1% from the year-ago quarter’s tally. Burger King’s adjusted EBITDA decreased 3.3% year over year. However, Popeye’s adjusted EBITDA surged 23.4% from the year-ago quarter.
Cash and Capital
Restaurant Brands ended the third quarter with cash and cash equivalent balance of $1,919 million, compared with $1,732 million in the prior-year quarter. As of Sep 30, 2020, its total debt was $12.9 billion compared with $12.8 billion as on Sep 30, 2019. The company’s board of directors announced a dividend of 52 cents per common share and partnership exchangeable unit of RBI LP for fourth-quarter 2020. The dividend is payable on Jan 5, 2021, to shareholders of record at the close of business as of Dec 21, 2020.
As of September-end, 96% of the company’s restaurants remained open worldwide, that included restaurants in North America, Asia Pacific and Europe, Middle East and Africa. Meanwhile, 92% of the restaurants remined open in Latin America.
Zacks Rank & Key Picks
Restaurant Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space include Brinker International, Inc. EAT Chuy's Holdings, Inc. CHUY and Fiesta Restaurant Group, Inc. FRGI, each sporting a Zacks Rank #1.
Brinker has a three-five-year earnings per share growth rate of 12.7%.
Chuy's Holdings has a trailing four-quarter earnings surprise of 87.3%, on average.
Fiesta Restaurant’s 2021 earnings are expected to surge 260.7%.
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