Restaurant Brands International
QSR
$70.24
+0.53%
Restaurant Brands International Inc. is one of the world's largest quick-service restaurant companies, operating a portfolio of iconic brands including Burger King, Tim Hortons, Popeyes, and Firehouse Subs across more than 33,000 restaurants in over 120 markets, generating approximately $47 billion in system-wide sales. The company operates primarily through a franchise and master-licensing model, earning revenue from franchise fees, property income, supply chain sales (particularly within Tim Hortons), company-operated restaurants, and advertising royalties. RBI is distinct in its multi-brand platform strategy, leveraging its scale to drive international expansion while maintaining a capital-light franchise structure that supports high margins and strong free cash flow generation. The current investor narrative centers on the Burger King "Reclaim the Flame" turnaround initiative, which has driven strong same-store sales growth and is showing tangible results, though Tim Hortons' recent slowdown has emerged as a key risk. Additionally, the broader valuation context has been influenced by peer transactions such as Yum Brands' Pizza Hut sale, which established new benchmarks and highlighted QSR's relative undervaluation, while the company's substantial dividend yield and defensive characteristics continue to attract income-oriented investors.…
QSR
Restaurant Brands International
$70.24
Related headlines
Investment Opinion: Should I buy QSR Today?
Based on the synthesis of data, QSR warrants a Hold rating. The core thesis is that the company's attractive valuation, strong analyst consensus, and high dividend yield are offset by significant risks including high leverage, an unsustainable payout ratio, and the Tim Hortons slowdown. The analyst consensus rating is 'Buy' with an average target price of $86.17, implying 23.3% upside, but this optimism may already be priced in given the recent underperformance.
Supporting evidence for the Hold includes the forward P/E of 15.79, which is reasonable but not exceptionally cheap; revenue growth of 4.56% year-over-year, which is modest; a net margin of 8.23%, which is thin; and free cash flow of $1.57 billion, which supports the dividend but not at the current payout level. The dividend yield of 4.86% is attractive, but the payout ratio of 142.8% raises concerns about sustainability. The stock's beta of 0.534 offers defensive characteristics, but relative strength has been weak.
The biggest risks that could invalidate the thesis include a dividend cut, a continued Tim Hortons decline, and failure to deleverage. The rating would upgrade to Buy if the payout ratio falls below 100% and Tim Hortons returns to growth, or downgrade to Sell if same-store sales turn negative and the dividend is cut. Relative to its history and peers, QSR appears fairly valued, trading at a discount to the broader market but with commensurate risks. The stock is not a compelling buy at current levels without clearer signs of sustainable growth and financial health.
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QSR 12-Month Price Forecast
The 12-month outlook for QSR is balanced, with the base case suggesting a target range of $80-90, representing 14-29% upside from the current price. The bull case hinges on a successful turnaround and Tim Hortons recovery, while the bear case is driven by dividend sustainability and leverage concerns. The stock's low beta and defensive nature provide some downside protection, but the high payout ratio and underperformance relative to the market are significant overhangs. I would upgrade to bullish if Tim Hortons shows sustained improvement and the payout ratio declines, and downgrade to bearish if same-store sales decline or the dividend is cut.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Restaurant Brands International's 12-month outlook, with a consensus price target around $85.96 and implied upside of +22.4% versus the current price.
Average Target
$85.96
0 analysts
Implied Upside
+22.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$78 - $104
Analyst target range
Bulls vs Bears: QSR Investment Factors
The bull case for QSR rests on the successful Burger King turnaround, attractive valuation, strong analyst support, and high dividend yield. However, the bear case highlights significant risks including the Tim Hortons slowdown, high leverage, an unsustainable payout ratio, and recent underperformance. Currently, the bear evidence appears slightly stronger due to the dividend payout exceeding earnings and the relative strength weakness, but the bull case could prevail if Tim Hortons stabilizes and the turnaround continues. The most critical tension is whether Burger King's momentum can offset Tim Hortons' weakness and drive overall growth, which will determine the stock's trajectory.
Bullish
- Burger King Turnaround Driving Growth: Burger King's "Reclaim the Flame" initiative is showing tangible results, with Q1 2026 same-store sales growth of 5.8% and Q2 2026 revenue rising 4.56% year-over-year to $2.52 billion. The $700 million investment is revitalizing the brand and driving franchisee profitability, positioning QSR for sustained top-line acceleration.
- Attractive Valuation vs Peers: QSR trades at a forward P/E of 15.79 and an EV/EBITDA of 16.17, which is below the broader market and peer averages, especially after Yum Brands' Pizza Hut sale established a higher valuation benchmark. This discount provides a margin of safety and potential for multiple expansion.
- Strong Analyst Consensus and Upside: 24 analysts rate QSR a 'Buy' with an average target price of $86.17, implying 23.3% upside from the current price of $69.91. The high target of $104 suggests significant optimism about the turnaround and international expansion.
- High Dividend Yield and Cash Flow: QSR offers a 4.86% dividend yield, supported by $1.57 billion in trailing free cash flow. The capital-light franchise model generates stable cash flows, making the dividend attractive for income investors despite a payout ratio of 142.8%.
Bearish
- Tim Hortons Slowdown Threatens Growth: Tim Hortons, a significant profit driver, has shown a recent slowdown, which remains a key risk. Any further weakness could offset Burger King's gains and pressure overall same-store sales and earnings growth.
- High Debt Burden and Low Current Ratio: QSR has a debt-to-equity ratio of 4.84 and a current ratio of 0.98, indicating limited short-term liquidity and high leverage. This constrains financial flexibility and increases vulnerability to rising interest rates.
- Dividend Payout Ratio Exceeds Earnings: The payout ratio of 142.8% means the company pays more in dividends than it earns, which is unsustainable in the long term. This could lead to a dividend cut or reduced investment in growth initiatives.
- Underperformance Relative to Market: QSR has underperformed the S&P 500 across all timeframes, with a 1-year relative strength of -11.72% and a 6-month relative strength of -26.06%. This negative momentum may continue to weigh on investor sentiment.
QSR Technical Analysis
Beta
0.54
0.54x market volatility
Max Drawdown
-14.6%
Largest decline past year
52-Week Range
$65-$82
Price range past year
Annual Return
+2.0%
Cumulative gain past year
| Period | QSR Return | S&P 500 |
|---|---|---|
| 1m | -12.4% | +1.2% |
| 3m | -5.7% | +4.5% |
| 6m | -8.6% | +14.6% |
| 1y | +2.0% | +16.0% |
| ytd | +3.6% | +14.3% |
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QSR Fundamental Analysis
Quarterly Revenue
$2.5B
2026-06
Revenue YoY Growth
+4.6%
YoY Comparison
Gross Margin
34.5%
Latest Quarter
Free Cash Flow
$1.6B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is QSR Overvalued?
PE
28.9x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 8x~25x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
16.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks for QSR are substantial, primarily stemming from its high leverage and weak liquidity. The debt-to-equity ratio of 4.84 and current ratio of 0.98 indicate that the company relies heavily on debt and may struggle to meet short-term obligations. Additionally, the dividend payout ratio of 142.8% is unsustainable, as it exceeds net income, potentially forcing a dividend cut or reduced reinvestment in the business. The net margin of 8.23% is thin, and earnings volatility is high, with quarterly EPS fluctuating significantly, which could lead to further financial instability if operational performance deteriorates.
Market and competitive risks include QSR's underperformance relative to the S&P 500, with a 1-year relative strength of -11.72% and a 6-month relative strength of -26.06%, indicating negative momentum that may persist. The beta of 0.534 suggests lower volatility, but the stock could still face pressure from sector rotation or valuation compression if growth slows. Competitive threats from other fast-food chains, such as McDonald's with its real estate-backed model and consistent dividend growth, could erode QSR's market share. Regulatory headwinds, such as minimum wage increases or changing consumer preferences, also pose risks.
The worst-case scenario for QSR would involve a continued Tim Hortons slowdown, a failure of the Burger King turnaround, and a dividend cut due to unsustainable payout. This could trigger a sell-off, driving the stock toward its 52-week low of $64.52, representing a 7.7% decline from the current price of $69.91. If analyst bear-case targets are met, the downside could be more severe; the low target of $78 is above the current price, but in a severe recession, the stock could fall below $60, implying a 14% loss. The maximum drawdown over the past 180 days was -14.58%, suggesting that a similar drawdown could occur again, potentially erasing $10.20 from the current price.
FAQ
The key risks include financial, operational, and market risks. Financially, the high debt-to-equity ratio of 4.84 and current ratio of 0.98 indicate liquidity concerns, while the payout ratio of 142.8% suggests the dividend may be cut. Operationally, the Tim Hortons slowdown could continue to drag on overall performance, and the Burger King turnaround may not be sustainable. Market risks include underperformance relative to the S&P 500, with a 1-year relative strength of -11.72%, and potential sector rotation away from consumer cyclical stocks. Additionally, a recession could reduce consumer spending on dining out, impacting same-store sales. These risks are ranked from highest to lowest severity: dividend sustainability, Tim Hortons decline, high leverage, and market underperformance.
The 12-month forecast for QSR is based on three scenarios: bull, base, and bear. The bull case (25% probability) targets $95-104, driven by a successful Burger King turnaround and Tim Hortons recovery. The base case (55% probability) targets $80-90, assuming moderate growth and stable dividends. The bear case (20% probability) targets $60-70, triggered by a dividend cut and worsening Tim Hortons performance. The most likely scenario is the base case, with a target of $86.17, aligning with the analyst average. The key assumption is that Burger King's momentum continues while Tim Hortons stabilizes, and the company maintains its dividend.
QSR appears fairly valued to slightly undervalued relative to its peers and the broader market. Its forward P/E of 15.79 is below the S&P 500 average, and its EV/EBITDA of 16.17 is in line with industry benchmarks. The stock trades at a discount to the valuation implied by Yum Brands' Pizza Hut sale, which suggests potential upside. However, the low net margin of 8.23% and high payout ratio may justify a discount. The market seems to be pricing in moderate growth and some risk, but not a disaster scenario. Compared to its own history, the current P/E is near the lower end of its range, indicating that the stock is not overvalued.
QSR may be a good buy for income-focused investors seeking a high dividend yield of 4.86%, but it comes with significant risks. The stock trades at a forward P/E of 15.79, which is reasonable, and analysts have an average target price of $86.17, implying 23.3% upside. However, the dividend payout ratio of 142.8% is unsustainable, and the company has high leverage with a debt-to-equity ratio of 4.84. The Tim Hortons slowdown is a major concern that could offset Burger King's turnaround. Therefore, it is only suitable for investors with a high risk tolerance and a long-term horizon who believe in the turnaround story.
QSR is more suitable for long-term investment due to its defensive characteristics, low beta of 0.534, and high dividend yield of 4.86%. The company operates in a stable industry with consistent cash flows, making it a potential income generator for patient investors. However, the high payout ratio and leverage require monitoring, and the turnaround may take time to fully materialize. Short-term trading is less advisable given the stock's recent underperformance and lack of clear catalysts. A minimum holding period of 2-3 years is recommended to allow for the turnaround to play out and to benefit from potential dividend growth. Investors should be prepared for volatility in the interim.