Restaurant Brands International
QSR
$77.88
-0.49%
Restaurant Brands International Inc. (QSR) is a global quick-service restaurant company that franchises and operates a portfolio of iconic brands, including Burger King, Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs, generating approximately $47 billion in system sales across over 33,000 restaurants in more than 120 markets. As one of the largest restaurant companies globally, it competes with industry giants like McDonald's and Yum! Brands, leveraging a heavily franchised, asset-light model that generates stable royalty and franchise fee income. The current investor narrative centers on the successful turnaround of Burger King, which has driven recent same-store sales growth and renewed optimism, while concerns persist over Tim Hortons' slowdown and the company's high leverage. Recent headlines highlight Burger King's $700 million reinvestment plan paying off, positioning QSR as a compelling value play with a 3.6% dividend yield, though the market remains watchful of balance sheet risks and segment-specific challenges.…
QSR
Restaurant Brands International
$77.88
Related headlines
Investment Opinion: Should I buy QSR Today?
Based on the analysis, QSR is rated a 'Buy' with a thesis that the Burger King turnaround and margin expansion will drive earnings growth, making the stock undervalued at its current forward PE of 17.70x. The consensus rating is 'Buy' with an average target price of $85.87, implying a 9.7% upside. Supporting evidence includes revenue growth of 7.35% YoY, gross margin expansion to 49.65%, operating margin of 26.99%, and strong free cash flow of $1.51 billion TTM. The stock trades at a PS ratio of 2.42 and EV/EBITDA of 16.17, which are reasonable for the sector. However, risks include high leverage (D/E 4.84), Tim Hortons' slowdown, and a high payout ratio. The rating would upgrade if the forward PE compresses below 15x or if Tim Hortons' same-store sales turn positive, and downgrade if revenue growth falls below 5% or if debt levels increase further. Overall, QSR is fairly valued relative to its growth prospects, with a slight undervaluation based on forward earnings.
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QSR 12-Month Price Forecast
The AI assessment is bullish on QSR, driven by the successful Burger King turnaround, margin expansion, and attractive forward valuation. The company's asset-light model provides stable cash flows, and the high dividend yield offers income support. However, the high leverage and Tim Hortons' weakness are key risks that could derail the thesis. The stance would be upgraded to high confidence if Tim Hortons shows signs of recovery and debt levels decrease, while a downgrade would occur if Burger King's growth stalls or if the company cuts its dividend.
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 $85.83 and implied upside of +10.2% versus the current price.
Average Target
$85.83
0 analysts
Implied Upside
+10.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$78 - $104
Analyst target range
QSR has coverage from 23 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 1.89 (where 1 is Strong Buy and 5 is Sell). The average target price is $85.87, implying an upside of approximately 9.7% from the current price of $78.26. The distribution shows a bullish tilt, with recent actions from Deutsche Bank and UBS reiterating Buy ratings, while TD Cowen and Citigroup maintain Hold/Neutral stances, indicating a balanced but optimistic outlook.
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Bulls vs Bears: QSR Investment Factors
QSR presents a mixed picture with strong operational improvements in Burger King and margin expansion, but offset by high leverage and Tim Hortons' weakness. The bull case is supported by the successful turnaround, attractive forward valuation, and high dividend yield, while the bear case highlights debt concerns, negative PEG, and limited upside near highs. Currently, the bull case has stronger evidence given the concrete improvements in margins and same-store sales, but the high leverage and Tim Hortons' underperformance remain significant risks. The key tension is whether Burger King's momentum can sustain and overcome the drag from Tim Hortons and the balance sheet, which will determine the stock's trajectory.
Bullish
- Burger King turnaround driving growth: Burger King's same-store sales grew 5.8% in Q1 2026, a key driver of the company's 7.35% revenue growth. This validates the $700 million reinvestment plan and suggests the brand's recovery is sustainable, boosting overall system sales.
- Strong margin expansion: Gross margin improved to 49.65% in Q1 2026 from 33.38% in Q1 2025, a 16.3 percentage point jump. Operating margin also rose to 26.99% from 20.63%, reflecting the benefits of the asset-light franchise model and operational efficiencies.
- Attractive valuation with forward PE discount: The forward PE of 17.70x is 38.8% below the trailing PE of 28.91x, implying significant expected earnings growth. This discount suggests the market is pricing in a strong earnings recovery, making the stock potentially undervalued relative to its growth prospects.
- High dividend yield with buyback potential: QSR offers a dividend yield of 4.86%, well above the S&P 500 average, providing income investors with a substantial yield. The payout ratio of 142.8% is concerning, but the company's strong free cash flow of $1.51 billion TTM supports the dividend.
Bearish
- High leverage and debt burden: Debt-to-equity ratio stands at 4.84, indicating significant leverage. Interest expenses of $171 million in Q1 2026 consume a large portion of operating income, making the company vulnerable to rising interest rates or earnings shortfalls.
- Tim Hortons segment underperforming: Tim Hortons' revenue of $997 million in the latest data reflects a slowdown, and its same-store sales growth has been lagging. This segment's weakness could offset Burger King's gains and limit overall growth.
- Negative PEG ratio signals earnings concerns: The PEG ratio of -1.09 is negative, which is unusual and may indicate that expected earnings growth is negative or that the metric is distorted by one-time items. This raises questions about the sustainability of earnings growth.
- Stock near 52-week high, limited upside: At $78.26, the stock is trading at 95.5% of its 52-week high of $81.96, leaving limited room for upside in the near term. The stock has already risen 24.12% over the past year, and a pullback could occur if momentum stalls.
QSR Technical Analysis
QSR has been in a sustained uptrend over the past year, with the stock price rising 24.12% over the trailing twelve months, significantly outperforming the S&P 500's 18.56% gain. The current price of $78.26 sits near the upper end of its 52-week range, at approximately 95.5% of the high of $81.96 and 27.6% above the low of $61.33, indicating strong momentum and investor confidence. This positioning near the highs suggests the market is rewarding the company's operational improvements, though it also raises the risk of short-term overextension.
Beta
0.53
0.53x market volatility
Max Drawdown
-12.5%
Largest decline past year
52-Week Range
$61-$82
Price range past year
Annual Return
+23.0%
Cumulative gain past year
| Period | QSR Return | S&P 500 |
|---|---|---|
| 1m | +5.2% | +2.7% |
| 3m | +8.8% | +1.0% |
| 6m | +9.1% | +12.0% |
| 1y | +23.0% | +18.9% |
| ytd | +14.9% | +12.5% |
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QSR Fundamental Analysis
QSR's revenue trajectory has been solidly positive, with the most recent quarter (Q1 2026) reporting revenue of $2.264 billion, a 7.35% year-over-year increase from $2.109 billion in Q1 2025. This growth is part of a multi-quarter trend, with revenue rising from $2.08 billion in Q2 2024 to $2.264 billion in Q1 2026, though the pace has been uneven, with Q4 2025 showing a slight dip to $2.466 billion. The growth is primarily driven by Burger King's turnaround, which saw 5.8% same-store sales growth, while Tim Hortons has been a laggard, with its segment revenue of $997 million in the latest data reflecting a slowdown. The company's asset-light franchise model supports high margins, with a gross margin of 49.65% in Q1 2026, up from 33.38% in Q1 2025, and an operating margin of 26.99%, indicating strong operational efficiency.
Quarterly Revenue
$2.3B
2026-03
Revenue YoY Growth
+7.3%
YoY Comparison
Gross Margin
49.6%
Latest Quarter
Free Cash Flow
$1.5B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is QSR Overvalued?
Given QSR's positive net income, the price-to-earnings (PE) ratio is the primary valuation metric. The trailing PE stands at 28.91x, while the forward PE is 17.70x, implying the market expects significant earnings growth, with the forward multiple being 38.8% lower than the trailing. This gap suggests that analysts anticipate a substantial increase in EPS, likely driven by continued Burger King recovery and margin expansion. The stock's PEG ratio is negative at -1.09, which is unusual and may indicate that earnings growth is expected to be negative or that the metric is distorted by one-time items, warranting caution in interpretation.
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 are significant for QSR. The company's debt-to-equity ratio of 4.84 indicates high leverage, and interest expenses of $171 million in Q1 2026 eat into operating income. The payout ratio of 142.8% suggests dividend payments exceed earnings, which could force a cut if cash flows weaken. Revenue growth is uneven, with Q4 2025 showing a slight dip, and the company relies heavily on Burger King's turnaround for growth, creating concentration risk. Additionally, the negative PEG ratio of -1.09 raises concerns about earnings sustainability, and the current ratio of 0.98 indicates potential liquidity issues, though the asset-light model provides some stability.
FAQ
The key risks include high financial leverage (debt-to-equity of 4.84), which increases vulnerability to interest rate hikes and earnings shortfalls. The dividend payout ratio of 142.8% is unsustainable and could lead to a dividend cut. Tim Hortons' underperformance is a company-specific risk, as its revenue of $997 million reflects a slowdown. Macro risks include consumer spending weakness in the quick-service restaurant sector. The stock's beta of 0.53 suggests lower market correlation, but it is still exposed to sector-specific headwinds.
The 12-month forecast for QSR is moderately bullish, with a base case target of $82-$90 (50% probability), aligning with the analyst average of $85.87. The bull case targets $90-$104 (30% probability) if Burger King's momentum continues and Tim Hortons stabilizes. The bear case targets $61-$72 (20% probability) if growth stalls and debt becomes a concern. The most likely scenario is the base case, assuming Burger King's same-store sales growth of 4-5% and stable margins.
QSR appears undervalued based on forward earnings, with a forward PE of 17.70x compared to the trailing PE of 28.91x, suggesting the market expects significant earnings growth. The PS ratio of 2.42 and EV/EBITDA of 16.17 are reasonable for the restaurant industry. The stock trades at a 9.7% discount to the analyst average target of $85.87. However, the negative PEG ratio of -1.09 is a red flag, indicating potential earnings concerns. Overall, the valuation is fair to slightly undervalued, with the market pricing in a successful turnaround.
QSR is a good buy for investors seeking a mix of growth and income, given the Burger King turnaround and a forward PE of 17.70x, which is attractive relative to the trailing PE of 28.91x. The analyst consensus is 'Buy' with an average target price of $85.87, implying a 9.7% upside. However, the high debt-to-equity ratio of 4.84 and Tim Hortons' slowdown are key risks. The stock is a good buy for those with a medium-to-long-term horizon who can tolerate some volatility, but it may not be suitable for risk-averse investors.
QSR is more suitable for long-term investment, given its growth trajectory and high dividend yield. The stock has a beta of 0.53, indicating lower volatility than the market, but it is still subject to sector cycles. The company's asset-light model and franchise structure provide stable cash flows, supporting long-term dividend growth. A minimum holding period of 3-5 years is recommended to fully capture the benefits of the Burger King turnaround and potential earnings growth. Short-term trading may be less attractive due to the stock's proximity to its 52-week high and limited upside in the near term.