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Restaurant Brands (QSR) Q1 Earnings Miss Estimates, Up Y/Y

Zacks Equity Research

Restaurant Brands International, Inc. QSR reported mixed first-quarter 2019 results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Both the top and bottom line increased on a year-over-year basis.

Adjusted earnings of 55 cents per share lagged the Zacks Consensus Estimate of 59 cents but increased 16.7% from the year-ago quarter number. This uptick can be primarily attributed to a consistent improvement in the company’s top line.

Total revenues came in at $1,266 million, which outpaced the consensus mark of $1,260 million. The metric also improved 1% from the year-ago quarter figure, courtesy of increased system-wide sales across the company’s brands.

Segmental Revenues

Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.

Revenues at Tim Hortons totaled $749 million compared with $763 million in the prior-year quarter. However, system-wide sales increased 0.5% on the back of net restaurant growth. Meanwhile, comps at this segment declined 0.6% compared with 0.3% decrease in the prior-year quarter.

Burger King’s revenues increased from $390 million in first-quarter 2018 to $411 million in the quarter under review, mainly driven by increased franchise and property revenues. Also, system-wide sales rose 8.2%, narrower than 11.3% growth registered in the year-ago comparable period and a 8.4% increase in the last reported quarter. System-wide sales growth can be attributed to net restaurant growth of 5.7% and positive comps growth.

Comps grew 2.2% compared with 3.8% growth in the prior-year quarter and a 1.7% increase in the last reported quarter.

Popeye’s Louisiana Kitchen, which was acquired on Mar 27, 2017, reported revenues of $106 million compared with $101 million in the year-ago quarter.

System-wide sales rose 6.8% owing to net restaurant growth of 6.6% and comps growth of 0.6%. Notably, system-wide sales growth compared unfavorably with prior-year quarter’s 10.9% increase. Comparable sales too compared unfavorably with the year-ago quarter’s comps growth of 3.2%.

Restaurant Brands International Inc. Price, Consensus and EPS Surprise

Restaurant Brands International Inc. Price, Consensus and EPS Surprise | Restaurant Brands International Inc. Quote

Operating Performance

In the quarter under review, the company’s adjusted EBITDA rose 0.5% on an organic basis driven by system-wide sales growth. Segment-wise, Tim Horton’s EBITDA declined 3.3%. Burger King’s EBITDA grew 3.9% year over year. Popeye’s EBITDA was up 5.4%.

Cash and Capital

Restaurant Brands exited the first quarter with cash and cash equivalent balance of $902 million. As of Mar 31, 2019, total debt was $12.3 billion. The company’s board of directors declared a dividend of 50 cents per share for the second quarter of 2019, payable Jul 3, to its shareholders of record at the close of business as of Jun 15.

Zacks Rank & Peer Releases

Restaurant Brands has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden DRI reported third-quarter fiscal 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate of $1.75. The bottom line also increased 5.3% year over year on the back of higher revenues.

Chipotle CMG reported better-than-expected results in the first quarter of 2019. Adjusted earnings of $3.40 per share surpassed the Zacks Consensus Estimate of $3.01 by 13%. The bottom line also grew 59.6% from the year-ago quarter figure backed by increased revenues and lower food costs.

Domino’s DPZ reported mixed first-quarter 2019 financial numbers, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.20 per share surpassed the Zacks Consensus Estimate of $2.07 and increased 10% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

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