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On Thursday, BMO Capital maintained its optimistic stance on Restaurant Brands International (NYSE:QSR) shares, reiterating an Outperform rating and a price target of $86.00. The endorsement comes after the company reported fourth-quarter earnings per share (EPS) of $0.81, surpassing the consensus estimate of $0.78. The better-than-expected results were attributed to strong international comparable sales and higher profitability at Tim Hortons (TH). According to InvestingPro data, the company has demonstrated robust revenue growth of 15.1% over the last twelve months, while maintaining a strong dividend track record with 10 consecutive years of increases.
Restaurant Brands anticipates its operating profit growth in 2025 to align with its long-term targets of over 8%, even though general and administrative (G&A) guidance was above consensus. The company also expects the first quarter to be the low point for comparable sales and EPS for the year, due to factors such as leap day and seasonality.
Despite recognizing the current competitive challenges faced by Burger King in the U.S., BMO Capital believes Restaurant Brands remains on track with the key elements of its multi-year investment thesis. The firm finds the valuation of Restaurant Brands shares to be attractive, citing a multiple range of 14.0x to 14.5x their projected 2025 EBITDA. This valuation perspective aligns with InvestingPro’s Fair Value analysis, which suggests the stock is currently undervalued. With a PEG ratio of 0.44, the company is trading at an attractive level relative to its growth potential. This valuation, combined with the company’s ongoing progress, underpins BMO Capital’s continued support for an Outperform rating and a $86 price target. For deeper insights into QSR’s valuation and growth prospects, including 8 additional ProTips, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Restaurant Brands International has been in the spotlight with various analyst firms providing their take on the company’s performance and future prospects. Stifel maintained its "Hold" rating on Restaurant Brands, keeping a steady price target of $68. The firm noted modest EBITDA growth since the acquisition of Popeyes in 2017, with challenges at Tim Hortons and Burger King affecting the growth trajectory.
Meanwhile, Guggenheim upgraded the stock from Neutral to Buy, although the price target was lowered to $71 from $74. The firm revised the company’s earnings per share estimates for 2025 and 2026, citing pressures on the stock. Guggenheim recognized the strategic improvements implemented by Patrick Doyle, Chairman of Restaurant Brands, which could lead to market share gains internationally.
On another note, Bernstein’s analysis of the U.S. restaurant sector suggested that despite a recent devaluation, there are attractive investment opportunities present. The firm noted that Restaurant Brands International, despite its international exposure, may already reflect negative market sentiment due to its relatively lower valuation. These recent developments provide insights into the performance and potential of Restaurant Brands International.
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