The first-quarter results for Restaurant Brands International Inc. (NYSE:QSR) were released last week, making it a good time to revisit its performance. Results were roughly in line with estimates, with revenues of US$1.2b and statutory earnings per share of US$0.48. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Restaurant Brands International's 23 analysts is for revenues of US$4.94b in 2020, which would reflect a not inconsiderable 11% decline in sales compared to the last year of performance. Statutory earnings per share are expected to fall 12% to US$2.04 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$4.95b and earnings per share (EPS) of US$2.03 in 2020. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$57.96, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Restaurant Brands International, with the most bullish analyst valuing it at US$80.00 and the most bearish at US$40.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 11% revenue decline a notable change from historical growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. It's pretty clear that Restaurant Brands International's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Restaurant Brands International's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$57.96, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Restaurant Brands International going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - Restaurant Brands International has 4 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
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