Restaurant Brands International
QSR
$74.52
+0.72%
Restaurant Brands International Inc. is one of the world's largest quick-service restaurant companies, operating a portfolio of iconic brands — Burger King, Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs — across more than 33,000 restaurants in over 120 markets, generating roughly $47 billion in system-wide sales. The company is best characterized as a heavily franchised, asset-light platform whose economics are driven by royalty streams, property income, supply-chain sales (notably within Tim Hortons), and advertising funds rather than company-operated restaurant margins. The current investor narrative centers on the multi-year Burger King "Reclaim the Flame" turnaround — a roughly $700 million reinvestment program that is now showing traction with same-store sales growth — set against persistent concerns about Tim Hortons' decelerating momentum in Canada and the drag from a leveraged balance sheet. Sentiment has been further shaped by relative-valuation arguments following Yum Brands' Pizza Hut divestiture, which established a fresh benchmark that makes QSR appear inexpensive versus franchise peers, while a recent Argus downgrade to Hold and mixed post-earnings analyst actions underscore the debate over whether the turnaround is fully priced.…
QSR
Restaurant Brands International
$74.52
Related headlines
Investment Opinion: Should I buy QSR Today?
Rating: Hold. The core thesis is that QSR offers a balanced risk/reward: the Burger King turnaround is real and the forward valuation is attractive at 17.0x, but Tim Hortons' slowdown and high leverage cap near-term upside. The analyst consensus is Buy with an average target of $85.92 (14.0% upside), yet the recent Argus downgrade to Hold and mixed actions suggest caution.\n\nSupporting evidence includes: 1) Forward PE of 17.0x versus sector peers at 20-25x, a 25-30% discount; 2) Revenue growth of 4.56% year-over-year, stable but not spectacular; 3) Net margin expansion to 20.1% in Q2 2026 from 7.8% a year ago, driven by operating leverage; 4) TTM free cash flow of $1.574 billion, though the dividend payout ratio of 142.8% is a concern; 5) Implied upside of 14.0% to the average target, with even the low target above the current price. The stock also offers a 4.86% dividend yield, providing income.\n\nKey risks that could invalidate the thesis include a continued Tim Hortons slowdown, which would pressure revenue and earnings; a dividend cut if FCF growth stalls; and a failure of Burger King's same-store sales to sustain above 3%. The rating would upgrade to Buy if forward PE compresses below 15x or if Tim Hortons returns to positive same-store sales growth. It would downgrade to Sell if revenue growth turns negative or if the dividend is cut. Relative to its own history and peers, QSR appears fairly valued to slightly undervalued on a forward basis, but the trailing multiple is elevated. Overall, the stock is a Hold for most investors, with a bias to accumulate on dips below $70.
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QSR 12-Month Price Forecast
The 12-month outlook is balanced with a slight positive tilt: the base case (50% probability) targets $80-90, implying 6-19% upside, driven by steady Burger King momentum and a stable dividend. The bull case (30%) requires Tim Hortons stabilization and multiple expansion, while the bear case (20%) reflects downside to the 52-week low if fundamentals deteriorate. Valuation is attractive on a forward basis but the trailing multiple and high leverage limit re-rating potential. I would upgrade to bullish if Tim Hortons shows positive SSSG and leverage declines; I would downgrade to bearish if Tim Hortons deteriorates further 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 $85.76 and implied upside of +15.1% versus the current price.
Average Target
$85.76
0 analysts
Implied Upside
+15.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$76 - $104
Analyst target range
Coverage is deep, with 25 analysts and a consensus recommendation of "Buy" (mean rating of 1.86 on a 1-to-5 scale where 1 is Strong Buy). The average target price of $85.92 implies roughly 14.0% upside from the current $75.34, and notably even the lowest target of $78.00 sits about 3.5% above the current price — a rare configuration indicating that no covering analyst sees downside from here. The consensus therefore leans clearly bullish, reinforced by a forward EPS estimate of $5.83 (range $5.48–$6.14) and revenue estimates averaging $10.01 billion (range $9.54–$10.42 billion).
The target range of $78.00 to $104.00 is wide — a spread of $26, or roughly 34% of the average target — signaling meaningful dispersion in conviction. The high target of $104.00 (about 38% above the current price) likely assumes successful Burger King same-store sales acceleration, Tim Hortons stabilization, multiple expansion toward franchise-peer levels, and leverage reduction; the low target of $78.00 essentially prices in modest growth with no re-rating. Institutional actions are mixed: JP Morgan, Guggenheim, Evercore ISI, and Piper Sandler remain constructive (Overweight/Buy/Outperform), while Citigroup, Morgan Stanley, Scotiabank, and TD Cowen stay Neutral/Hold, and Argus downgraded from Buy to Hold on September 25, 2026 — a pattern of stable-to-slightly-cautious revisions that suggests the Street is waiting for further proof of the turnaround before broadly raising targets.
Bulls vs Bears: QSR Investment Factors
The bull case rests on Burger King's turnaround traction, a cheap forward valuation (17.0x PE vs peers at 20-25x), strong cash flow, and a consensus Buy rating with 14% upside to the average target. However, the bear case is equally compelling: Tim Hortons' slowdown threatens the largest revenue segment, leverage is high at 4.84x debt-to-equity, and the dividend payout ratio of 142.8% is unsustainable without continued FCF growth. Currently, the bear evidence appears slightly stronger because the stock trades at 28.9x trailing PE (mid-to-upper historical range) and has failed to break out above $81.96, while revenue growth of 4.56% is modest. The single most important tension is whether Burger King's same-store sales momentum can offset Tim Hortons' deceleration and drive enough FCF growth to de-lever the balance sheet without cutting the dividend.
Bullish
- Burger King turnaround gaining traction: Burger King's 'Reclaim the Flame' $700 million reinvestment is showing results, with Q1 2026 same-store sales growth of 5.8% cited in recent coverage. This is the key catalyst that could drive accelerated royalty growth and justify multiple expansion.
- Attractive forward valuation vs peers: Forward PE of 17.0x is well below the 20-25x range typical for franchise peers like McDonald's and Yum Brands, and the EV/EBITDA of 15.7x also screens cheap. The Yum/Pizza Hut deal benchmark suggests QSR's discount may be overdone.
- Strong profitability and cash generation: Q2 2026 net income surged to $507 million (20.1% margin) from $189 million (7.8% margin) a year ago, while TTM free cash flow is robust at $1.574 billion. The asset-light franchise model generates high returns with ROE of 21.4%.
- Analyst consensus bullish with no downside targets: 25 analysts rate QSR a 'Buy' with a mean rating of 1.86, and even the lowest target of $78.00 is 3.5% above the current $75.34. The average target of $85.92 implies 14.0% upside, reflecting confidence in the turnaround.
Bearish
- Tim Hortons slowdown threatens revenue base: Tim Hortons is the largest segment at $1.137 billion, exceeding Burger King's $342 million in royalties, so its deceleration is a major risk. Recent coverage explicitly flags Tim Hortons' slowdown as a key risk even as Burger King improves.
- Elevated leverage constrains financial flexibility: Debt-to-equity of 4.84x and total debt to capitalization of 80.3% are high, with a current ratio of 0.979 indicating thin liquidity. Interest expense of $170 million per quarter consumes a significant portion of operating income.
- Dividend payout ratio exceeds earnings: The payout ratio of 142.8% means dividends paid exceed net income, funded by cash flow and potentially leverage. This raises sustainability concerns if free cash flow growth stalls.
- Mixed analyst actions and recent downgrade: Argus downgraded QSR from Buy to Hold on September 25, 2026, and several firms (Citigroup, Morgan Stanley, Scotiabank, TD Cowen) remain Neutral/Hold. This suggests the Street is waiting for more proof before broadly raising targets.
QSR Technical Analysis
QSR is in a choppy, range-bound recovery rather than a clean uptrend: the stock is up 11.70% over the trailing year and 11.10% year-to-date, but sits only about 8.1% below its 52-week high of $81.96 and roughly 16.8% above its 52-week low of $64.52, placing it at approximately 62% of its 52-week range. That mid-to-upper range positioning signals a stock that has reclaimed lost ground but has repeatedly failed to break out to new highs, with the 52-week high acting as a ceiling. The -14.99% max drawdown over the period confirms meaningful intermediate volatility despite the positive annual return.
Short-term momentum is clearly improving and diverging positively from the medium-term trend: the stock has gained 5.14% over the past month and 3.96% over three months, while the six-month change remains -6.87%, indicating a V-shaped recovery off the late-September/early-October trough near $69.43. This is corroborated by relative strength — QSR outperformed SPY by 6.16 percentage points over the past month (versus SPY's -1.02%) and by 1.11 points over three months, though it still lags SPY by 13.32 points over six months and 1.43 points over the full year. The recent run from roughly $69.76 on October 1 to $75.34 represents an approximate 8% rebound in under four weeks, suggesting buyers are stepping in on dips, but the failure to hold the $76.41 prior close (a -1.40% single-day pullback) hints at resistance overhead.
Key technical levels are well defined: support sits at the 52-week low of $64.52, with a nearer-term floor around the $69.40–$70.00 zone that held in early October, while resistance is anchored at the 52-week high of $81.96 and the $80–$81 congestion area that capped rallies in late August and early September. A decisive breakout above $81.96 would signal a new leg higher and validate the turnaround thesis, whereas a breakdown below $69.40 would reopen the path toward the $64.52 low and undermine the recovery. Volatility is notably subdued relative to the market — beta of 0.535 implies the stock moves roughly 47% less than SPY — which supports larger position sizing for risk-parity purposes but also means the stock may lag in sharp risk-on rallies; the short ratio of 5.5 days suggests moderate short interest that could fuel a squeeze on a breakout.
Beta
0.54
0.54x market volatility
Max Drawdown
-15.0%
Largest decline past year
52-Week Range
$65-$82
Price range past year
Annual Return
+11.7%
Cumulative gain past year
| Period | QSR Return | S&P 500 |
|---|---|---|
| 1m | +4.3% | +0.9% |
| 3m | +0.2% | +4.1% |
| 6m | -6.9% | +7.2% |
| 1y | +11.7% | +12.4% |
| ytd | +9.9% | +13.3% |
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QSR Fundamental Analysis
Revenue is growing at a modest but stable pace: Q2 2026 revenue of $2.52 billion rose 4.56% year-over-year from $2.41 billion in Q2 2025, extending a consistent cadence of roughly $2.26–2.52 billion per quarter across the trailing four periods (Q3 2025: $2.449 billion; Q4 2025: $2.466 billion; Q1 2026: $2.264 billion). Segment data shows Tim Hortons as the largest contributor at $1.137 billion, followed by Restaurant Holdings/property at $506 million, Burger King brand royalties at $342 million, International at $274 million, Popeyes at $199 million, and Firehouse Subs at $62 million — meaning the Canadian coffee franchise and supply-chain operations, not Burger King, drive the revenue base, which is why Tim Hortons' slowdown is the key growth risk even as Burger King's turnaround accelerates. The 4.56% top-line growth is respectable for a mature franchisor but below the double-digit pace investors might expect from a turnaround story, implying the investment case rests more on margin and capital returns than on rapid revenue expansion.
Profitability is strong and improving: Q2 2026 net income reached $507 million (20.1% net margin) versus $189 million (7.8% margin) in Q2 2025, with operating income of $699 million (27.7% operating margin) and EBITDA of $792 million (31.4% EBITDA margin). Gross margin, however, is structurally lower at 34.5% in Q2 2026 (down from 49.6% in Q1 2026 and 47.5% in Q4 2025) because of the mix shift toward lower-margin Tim Hortons supply-chain sales, while the company-level gross margin of 41.1% and operating margin of 23.7% remain healthy for the restaurant sector. The quarterly net margin is volatile — ranging from 4.6% in Q4 2025 to 20.1% in Q2 2026 — largely due to interest expense ($170 million in Q2) and tax timing, but the trailing ROE of 21.4% and ROA of 6.4% confirm the franchise model's high returns on capital.
Financial health is the principal risk: debt-to-equity stands at an elevated 4.84x (total debt to capitalization of 80.3%), and the current ratio of 0.979 signals thin short-term liquidity, meaning the company relies on steady cash generation to service leverage. Free cash flow is robust — $1.574 billion TTM, with quarterly FCF of $479 million in Q2 2026 and operating cash flow of $530 million — but the dividend consumes a large share: the payout ratio of 142.8% (dividend yield 4.86%) exceeds earnings, and dividends paid of $296 million in Q2 plus $145 million of buybacks absorbed most of the quarter's cash flow. Interest coverage of roughly 4.1x and a cash balance of $1.063 billion provide a cushion, but with capex modest at $51 million per quarter, the model is clearly cash-generative; the question is whether FCF growth can outpace the heavy capital-return commitments without incremental leverage.
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?
Because QSR is solidly profitable (Q2 2026 net income of $507 million; TTM EPS positive), the PE ratio is the appropriate primary metric. The stock trades at a trailing PE of 28.9x versus a forward PE of 17.0x — a striking 41% compression that implies the market expects earnings to grow sharply, consistent with consensus EPS estimates of $5.83 for the forward period versus the current trailing figure. The PEG ratio of -1.09 is distorted by prior-period earnings volatility and should be disregarded; the forward multiple is the more meaningful anchor.
Against the sector, QSR screens as a relative value: its PS ratio of 2.42x and EV/Sales of 4.37x are modest for a franchised restaurant platform, and its EV/EBITDA of 15.7x sits below the 20–25x range typical of high-quality franchise peers such as McDonald's and Yum Brands. The forward PE of 17.0x versus a sector that generally trades in the low-to-mid 20s implies a meaningful discount of roughly 25–30%, which the market justifies with slower same-store sales growth, Tim Hortons' deceleration, and the 4.84x leverage — but the Yum/Pizza Hut transaction benchmark highlighted in recent coverage suggests the discount may be overdone relative to the quality of QSR's royalty streams.
Historically, QSR's own valuation band has been wide: its quarterly PE has ranged from roughly 8.4x (Q4 2023) to 50.2x (Q4 2025), with PS ratios between 8.6x and 14.2x in the historical dataset — though these figures reflect different share-count and reporting conventions than the current 2.42x PS and 28.9x PE, so the comparison should be treated directionally. What is clear is that the current 28.9x trailing PE sits in the middle-to-upper portion of its multi-year band, while the 17.0x forward PE is near the lower end, suggesting the market is pricing modest optimism on near-term earnings delivery but not embedding heroic multiple expansion — leaving room for re-rating if Burger King momentum persists.
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
15.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant due to the leveraged balance sheet: debt-to-equity of 4.84x and total debt to capitalization of 80.3% mean the company is highly sensitive to interest rate changes and refinancing risk. The current ratio of 0.979 indicates thin short-term liquidity, and interest expense of $170 million per quarter consumes roughly 24% of operating income ($699 million). Additionally, the dividend payout ratio of 142.8% exceeds earnings, requiring the company to fund dividends partly from cash reserves or incremental debt, which could strain financial flexibility if free cash flow (TTM $1.574 billion) declines. Revenue concentration in Tim Hortons ($1.137 billion, or 45% of Q2 2026 revenue) is a key operational risk, as a slowdown in Canada would disproportionately impact results.\n\nMarket and competitive risks include valuation compression if the turnaround fails to sustain momentum. QSR trades at a trailing PE of 28.9x, which is in the mid-to-upper portion of its historical range, and a forward PE of 17.0x that already prices in earnings growth. If same-store sales decelerate or Tim Hortons' weakness persists, the multiple could contract toward the low end of its historical band (e.g., 15x forward), implying downside. The stock's low beta of 0.535 offers some protection in market selloffs but also means it may lag in risk-on rallies. Competitive pressures are intensifying, as evidenced by McDonald's marketing reset and the IPO of Jersey Mike's, which could steal share in the QSR segment. Regulatory headwinds, such as minimum wage increases in Canada or menu labeling laws, could also pressure franchisee profitability and royalty streams.\n\nThe worst-case scenario involves a combination of Tim Hortons' same-store sales turning negative, Burger King's turnaround stalling, and a dividend cut to preserve cash for debt reduction. In that scenario, the stock could retest its 52-week low of $64.52, representing a 14.4% decline from the current $75.34. A more severe outcome, such as a recession triggering a 20% drop in system-wide sales and a liquidity crunch, could push the stock toward the analyst low target of $78.00 (which is above current, so not a downside) or lower; however, the 52-week low of $64.52 is a realistic downside anchor, implying a loss of approximately 14.4%. The max drawdown over the past year was -14.99%, consistent with this level. Investors should note that the low beta may cushion the fall, but the high leverage amplifies fundamental risk.
FAQ
The most severe risk is financial: debt-to-equity of 4.84x and a current ratio of 0.979 mean high leverage and thin liquidity, with interest expense consuming 24% of operating income. Second is operational: Tim Hortons accounts for 45% of revenue and is slowing, which could drag overall growth. Third is dividend sustainability: the payout ratio of 142.8% exceeds earnings, raising the possibility of a cut if FCF declines. Fourth is competitive: McDonald's marketing reset and new entrants like Jersey Mike's could pressure market share. Macro risks are mitigated by the low beta of 0.535, but a recession could still impact system-wide sales.
Our 12-month forecast has three scenarios: bull case (30% probability) targets $92-104, driven by Burger King SSSG >6% and Tim Hortons stabilization; base case (50%) targets $80-90, assuming steady Burger King momentum and flat Tim Hortons; bear case (20%) targets $64-72, reflecting a Tim Hortons decline and potential dividend cut. The most likely scenario is the base case, with a target around $85, implying 13% upside. The key assumption is that Burger King's same-store sales remain above 4% and Tim Hortons does not deteriorate further. Analyst consensus average target is $85.92, consistent with our base case.
QSR appears fairly valued to slightly undervalued on a forward basis: the forward PE of 17.0x is below the 20-25x range for franchise peers like McDonald's and Yum Brands, and the EV/EBITDA of 15.7x also screens cheap. However, the trailing PE of 28.9x is in the mid-to-upper portion of its historical range, suggesting the market is pricing in earnings growth. The PS ratio of 2.42x is modest for a franchised restaurant platform. The valuation implies the market expects mid-single-digit earnings growth and no major deterioration in Tim Hortons. If the turnaround accelerates, multiple expansion could drive the stock higher; if it stalls, the trailing multiple could compress.
From a risk/reward perspective, QSR offers a balanced proposition: the average analyst target of $85.92 implies 14.0% upside, and even the lowest target of $78.00 is above the current price. The forward PE of 17.0x is attractive versus peers, and the 4.86% dividend yield provides income. However, the biggest downside risk is a Tim Hortons slowdown or dividend cut, which could push the stock toward the 52-week low of $64.52 (14.4% downside). For income-oriented investors with a medium-term horizon, QSR is a reasonable buy on dips, but for growth-focused investors, the modest 4.56% revenue growth may be insufficient. It is a good buy for those seeking defensive exposure with yield, but position sizing should account for leverage risks.
QSR is better suited for long-term investment (minimum 2-3 years) given its low beta of 0.535, stable dividend yield of 4.86%, and the multi-year nature of the Burger King turnaround. Short-term trading is less attractive due to the stock's range-bound behavior (52-week range $64.52-$81.96) and modest volatility. The high payout ratio and leverage introduce event risk around earnings, making short-term positions riskier. Long-term investors can benefit from the franchise model's cash generation and potential multiple expansion if the turnaround succeeds. A suggested minimum holding period is 2 years to allow for the turnaround to fully play out and for dividend reinvestment to compound.