The firm owns a diverse portfolio of four iconic quick-service restaurant brands. This helps to mitigate risk and provides multiple growth avenues as the experienced management team drives operational improvements.
Even with over 31,100 locations globally, there’s still significant room for international growth, particularly in high-potential markets like China.
The stock trades at 20.1 times the company’s forward earnings forecast, a reasonable valuation as the company continues to execute its expansion plans.
Even though China’s economic growth has slowed lately, this fast-food giant continues to expand in that country. We feel its investments will ultimately pay off, which will let the firm keep raising its dividends.
RESTAURANT BRANDS INTERNATIONAL INC. (Toronto symbol QSR; www.rbi.com) raised your quarterly dividend by 5.5% with the April 2024 payment, to $0.58 U.S. a share from $0.55 U.S. The annual rate of $2.32 U.S. yields 3.4%.
Restaurant Brands’ dividend has grown an average of 3.0% annually over the last 5 years. Its TSI Dividend Sustainability Rating is Above Average.
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Restaurant Brands has 31,124 outlets in over 100 countries comprised of Burger King, Tim Hortons (coffee and donuts), Popeyes Louisiana Kitchen (fried chicken) and Firehouse Subs.
Growth Stocks: Restaurant Brands expands its China footprint with strategic investments
The company announced two transactions that will help its growth in China. The first transaction is the acquisition of Popeyes China from Tims China at an enterprise value of $15 million U.S. The company now owns Popeyes China, which has 14 stores in Shanghai. It will bring on a master franchisee to accelerate store development for the brand. The pace of restaurant growth is expected to ramp up through investments in local teams and restaurant development. Longer-term, Restaurant Brands expects to bring on local partners to form a more traditional master franchisee, similar to other Popeyes international markets.
The second transaction involves Cartesian Capital and Restaurant Brands investing up to $50 million U.S. in Tims China’s business through three-year convertible notes. That will give the company an 18% stake in that business.
The company’s total outlay will be as much as $45 million for the two transactions. These deals will make it easier to ramp up the pace of expansion in this important market.
The stock also trades at a reasonable 20.1 times the projected 2024 earnings of $3.38 U.S. a share.
Recommendation in The Successful Investor: Restaurant Brands Int’l Inc. is a buy.
