Internationa restaurant brands – GuruFocus.com
Restaurant Brands International (NYSE: QSR, 30-year Financials) stock appears to be properly valued, according to GuruFocus Value’s calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 64.32 per share and market cap of $ 19.6 billion, Restaurant Brands International stock is believed to be fairly valued. The GF value for Restaurant Brands International is shown in the table below.
Given that Restaurant Brands International is fairly valued, its long-term stock return is likely to be close to its business growth rate, which has averaged 3.5% over the past three years and is expected to grow by 7 , 63% per year over the next three years. at five years.
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It is always important to check the financial strength of a company before buying its shares. Investing in companies with low financial strength presents a higher risk of permanent loss. Examining the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a business. Restaurant Brands International has a cash-to-debt ratio of 0.11, which is worse than 77% of companies in the restaurant industry. The overall financial strength of Restaurant Brands International is 3 in 10, indicating that the financial strength of Restaurant Brands International is low. Here is Restaurant Brands International’s debt and cash flow for the past several years:
Companies that have historically been profitable over the long term pose less risk to investors who want to buy stocks. Higher profit margins usually dictate a better investment compared to a business with lower profit margins. Restaurant Brands International has been profitable 9 in the past 10 years. In the past twelve months, the company has achieved sales of $ 5 billion and earnings of $ 1.7 per share. Its operating margin is 32.06%, which ranks better than 97% of companies in the restaurant industry. Overall, Restaurant Brands International’s profitability is ranked 7 out of 10, indicating acceptable profitability. Here is Restaurant Brands International’s sales and net income for the past few years:
Growth is probably one of the most important factors in the valuation of a business. GuruFocus research has found that growth is closely tied to the long-term performance of a company’s stocks. If a company’s business is growing, the business typically creates value for its shareholders, especially if the growth is profitable. Likewise, if the income and profits of a business decrease, the value of the business will decrease. Restaurant Brands International’s 3-year average revenue growth rate is over 78% for businesses in the restaurant industry. Restaurant Brands International’s 3-year average EBITDA growth rate is -5.1%, which is in line with the average for companies in the restaurant industry.
Another method of determining a company’s profitability is to compare its return on invested capital to the weighted average cost of capital. Return on Invested Capital (ROIC) measures the extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies that the company creates value for the shareholders. Over the past 12 months, Restaurant Brands International’s return on invested capital is 7.12 and its cost of capital is 6.50. Restaurant Brands International’s historic ROIC vs WACC comparison is shown below:
Overall, Restaurant Brands International (NYSE: QSR, 30-year Financials) shares are showing all signs of a fair valuation. The company’s financial situation is bad and its profitability is fair. Its growth is in the mid-range of companies in the restaurant industry. To learn more about Restaurant Brands International’s shares, you can view its 30-year financial data here.
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