Restaurant Brands Q3 Revenue Rises 12%; Shares Plunge

Restaurant Brands International (QSR) beat on profit but missed on revenue in the third quarter of 2021, as the Delta variant slowed its return to the offices, and a shortage of staff affected the sales of its Tim Hortons and Burger King restaurants.

Revenue came in at $1.5 billion for the quarter ended September 30, an increase of 12% from $1.34 billion in the prior-year quarter. Same-store sales at Tim Hortons, Restaurant Brands’ largest revenue generator, jumped 8.9% in the second quarter, while those at Burger King rose 7.9%. Global system-wide sales grew 11% year-on-year.

Net income attributable to common shareholders was $221 million ($0.70 per share) in Q3 2021 compared to a profit of $145 million ($0.47 per share) in Q2 2020. Meanwhile, adjusted EPS was $0.76, up from $0.68 a year ago.

Analysts on average expected adjusted EPS of $0.74 on $1.53 billion in revenue, according to financial data firm Refinitiv.

Restaurant Brands CEO José E. Cil said, “Our results this quarter reflect the value of having a diversified business model across three brands and in over 100 countries. Overall, we saw a continued acceleration in system-wide-sales growth relative to 2019, reflecting improvements in the Tim Hortons Canada business as well as strength across each of our brand’s international businesses.

“Our strong restaurant growth this year and exciting development pipeline keep us on track to return to pre-pandemic unit growth levels this year and well positioned to accelerate in 2022 as we continue on our path to 40,000 restaurants around the world. This quarter, we also took important steps to focus our attention on the most significant opportunities at Burger King U.S. to drive long-term, sustainable growth in the business.”

The company recently expanded its $1-billion share repurchase program. During the quarter, it returned over $425 million of capital to shareholders, including the repurchase of just over $180 million of common stock. (See Analysts’ Top Stocks on TipRanks)

On October 20, RBC Capital analyst Christopher Carril reiterated a Buy rating on QSR and a price target of C$74. This implies 1.2% upside potential.

The rest of the Street is cautiously optimistic about QSR, with a Moderate Buy consensus rating based on nine Buys and six Holds. The Restaurant Brands International price target of C$88.80 implies 21.4% upside potential to current levels.

TipRanks’ Smart Score

Restaurant Brands International scores an 8 out of 10 on the TipRanks Smart Score rating system, indicating that the stock returns should beat the overall market.