Today, we’ll take a look at well-established Restaurant Brands International Inc. (NYSE: QSR). The company’s shares have received a lot of attention due to a substantial price increase on the NYSE over the past few months. With many analysts covering large-cap stocks, we can expect any price-sensitive announcements to have already factored into the stock price. However, could the stock still trade at a relatively cheap price? Let’s take a closer look at Restaurant Brands International’s valuation and outlook to determine if there’s still a bargain opportunity.
See our latest analysis for Restaurant Brands International
What is Restaurant Brands International worth?
According to my valuation model, Restaurant Brands International appears to have a fair price of about 11.41% above my intrinsic value, which means that if you buy Restaurant Brands International today, you will pay a relatively within reason. And if you think the stock is really worth $58.05, there is only insignificant downside when the price drops to its true value. Additionally, Restaurant Brands International stock price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will Restaurant Brands International generate?
Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Buying a big company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profits expected to increase by 60% over the next two years, the future looks bright for Restaurant Brands International. It seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you
Are you a shareholder? QSR’s optimistic future growth appears to have been factored into the current share price, with the shares trading around its fair value. However, there are also other important factors that we have not considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you be confident enough to invest in the business if the price drops below its fair value?
Are you a potential investor? If you’ve been keeping an eye on QSR, now might not be the best time to buy, given that it’s trading around its fair value. However, the bullish outlook is encouraging for the company, which means it is worth digging deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while the quality of earnings is important, it is equally important to consider the risks that Restaurant Brands International faces at this stage. Know that Restaurant Brands International shows 3 warning signs in our investment analysis and 1 of them is potentially serious…
If you are no longer interested in Restaurant Brands International, you can use our free platform to view our list of over 50 other stocks with high growth potential.
What are the risks and opportunities for International restaurant brands?
Earnings are expected to grow 3.48% annually
Revenues have increased by 6.2% per year over the past 5 years
Debt is not well covered by operating cash flow
Significant insider selling in the last 3 months
See all risks and rewards
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.