Restaurant Brands International (NYSE:QSR), the global owner of Burger King, Tim Hortons, and Popeyes, reported a 6.43% YoY increase in Q3 FY2023 revenue, totaling $1.84 billion. However, this fell short of the estimated $1.87 billion. The company's non-GAAP EPS was $0.90 per share, down from $0.96 but surpassing the projected $0.85.
The multinational fast-food corporation attributed its performance to increased commodity, labor, and energy costs due to macroeconomic factors such as the Ukraine conflict and COVID-19, as well as potential conflicts in the Middle East. Despite these challenges, Restaurant Brands' GAAP gross margin improved to 41.5%, up from 40.4% YoY.
Over the past year, Restaurant Brands expanded its footprint by 407 stores, bringing its total to 30,375 locations by the end of the quarter. This expansion coincided with a 7% YoY increase in same-store sales. Nevertheless, this growth slightly missed expectations.
Consumer perception of Restaurant Brands' meals as unhealthy has been a hurdle for the company amidst an increasing focus on health and wellness. Despite this obstacle, the company's strong brand equity continues to drive customer loyalty and purchasing decisions.
Over the last four years, Restaurant Brands' annualized revenue growth rate was 5.76%. Even with this modest rate, it managed to open new restaurants and grow sales at existing locations. Analysts predict a 6.63% sales growth for the company over the next year.
However, when compared to the sector average, Restaurant Brands' average same-store sales growth of 8.7% YoY over the last two years lagged behind. This growth decelerated from 9% YoY to 7% in the latest quarter.
With a market capitalization of $22.1 billion, over $1.31 billion in cash reserves, and positive free cash flow over the last year, Restaurant Brands is well-positioned for growth investment. Despite exceeding EPS expectations, its stock price remained steady at $69.8 per share post-reporting.
InvestingPro Insights
Drawing from InvestingPro's real-time data, Restaurant Brands International boasts a market capitalization of $31.31 billion, a P/E ratio of 20.75, and a revenue of $6780 million as of Q2 2023. This strong financial position aligns with InvestingPro's observation of the company's high earnings quality, with free cash flow exceeding net income.
In terms of InvestingPro Tips, two key insights stand out. Firstly, Restaurant Brands has consistently increased its earnings per share, a positive signal for potential investors. Secondly, the company has raised its dividend for 8 consecutive years, demonstrating a commitment to returning capital to shareholders.
These insights are part of the wealth of data and tips available through InvestingPro, which hosts an additional 9 tips for Restaurant Brands International, offering a comprehensive view of the company's financial health and investment potential.
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