Restaurant Brands International Inc. QSR is scheduled to report second-quarter 2018 results on Aug 1, before market open. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 17.9%, the average trailing four-quarter beat being 16.3%.
What to Expect?
The Zacks Consensus Estimate for the quarter under review is pegged at 64 cents, up 25.5% from the prior-year quarter. Notably, the consensus estimates for the quarter have been revised upward by a penny over the past seven days. Moreover, the Zacks Consensus Estimate for revenues is $1,382 million, up 22% from the prior-year actual figure.
Let’s take a look at how the company’s top and bottom line will shape up in the to-be-reported quarter.
Factors at Play
Restaurant Brands’ top and bottom line in the quarter under review will continue increasing on a year-over-year basis. This upside can be attributed to various sales-boosting initiatives like improving services, reimaging restaurants and menu innovation. These efforts are also boosting traffic by expanding its customer base. Meanwhile, the Popeyes Louisiana Kitchen acquisition proved accretive to the company’s second-quarter performance.
Furthermore, the company is taking initiatives to re-image its restaurants to a more modern décor. In March 2018, Restaurant Brands announced a new Tim Hortons restaurant design called the welcome image, which entails a redesign of Tim Hortons restaurants. The company plans to re-image a majority of its restaurants across Canada over the next four years.
Also, Restaurant Brands sees substantial opportunity to strengthen its brand portfolio in existing markets as well as new markets. Meanwhile, it continues to expand and speed up development of all the three brands by establishing master franchisees, with exclusive development rights and joint ventures coupled with new and existing franchisees across the globe.
Given that almost 100% of the company’s current system-wide restaurants are franchised, its expenses are considerably low. This is because Restaurant Brands signs franchise agreements for all the restaurants instead of operating them itself, thereby putting the cost burden on the franchisees that operate the businesses. The reduced capital requirements thus facilitate earnings growth and ROE expansion.
Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Restaurant Brands International Inc. Price, Consensus and EPS Surprise | Restaurant Brands International Inc. Quote
Our Quantitative Model Suggests a Beat
According to our quantitative model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP has a fair chance of beating estimates. Meanwhile, stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) are best avoided.
Restaurant Brands has an Earnings ESP of +1.17% and a Zacks Rank #3, a combination that increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few other stocks from the Restaurant space that investors may consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
Hyatt Hotels Corporation H has an Earnings ESP of +7.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hilton Grand Vacations Inc. HGV has an Earnings ESP of +11.36% and a Zacks Rank of 2.
Red Rock Resorts, Inc. RRR has an Earnings ESP of +4.00 % and a Zacks Rank #2.
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