Restaurant Brands International Inc. (QSR:TSX) Argus upgrades to Buy from Hold

STA Research
by: STA Research
Restaurant Brands International Inc.

Argus Capital upgraded Restaurant Brands Inc. to a Buy rating from a Hold and set the 12 month target price on the stock at $67 per share.

STA Research maintained the Hold rating, and reiterated the $70 target on the stock.

Restaurant Brands International Inc Stock Analysis:

Based on the Restaurant Brands International Inc stock forecasts from 14 analysts, the average analyst target price for Restaurant Brands International Inc is CAD 72.12 over the next 12 months. Restaurant Brands International Inc’s average analyst rating is Buy . Stock Target Advisor’s own stock analysis of Restaurant Brands International Inc is Neutral, which is based on 7 positive signals and 7 negative signals. At the last closing, Restaurant Brands International Inc’s stock price was CAD 76.21Restaurant Brands International Inc’s stock price has changed by +11.01% over the past week, +13.00% over the past month and -4.65% over the last year.

What we like:

High market capitalization

This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.

Low volatility

The stock’s annual returns have been stable and consistent compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile. Although stability is good, also keep in mind it can limit returns.

Superior return on equity

The company management has delivered better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.

Superior capital utilization

The company management has delivered better return on invested capital in the most recent 4 quarters than its peers, placing it in the top quartile.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

Superior Earnings Growth

This stock has shown top quartile earnings growth in the previous 5 years compared to its sector.

What we don’t like:

Poor risk adjusted returns

This company is delivering below median risk adjusted returns in its peers. Even if it is outperforming on returns , the returns are unpredictable. Proceed with caution.

Below median dividend returns

The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income.

Overpriced compared to earnings

The stock is trading high compared to its peers on a price to earning basis and is above the sector median.

Overpriced compared to book value

The stock is trading high compared to its peers median on a price to book value basis.

Overpriced on cashflow basis

The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Overpriced on free cash flow basis

The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

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