Portfolio investing: Higher promotional costs weigh on Tim Hortons earnings

Tim Hortons Inc., Toronto symbol THI, saw less traffic at its Canadian coffee-and-donut stores in the first quarter of 2011, due to bad winter weather. As well, the company spent more on promotions, which hurt its earnings growth.

We analyze Tim Hortons in Stock Pickers Digest, our newsletter for portfolio investing in aggressive stocks.

In the three months ended April 3, 2011, Tim Hortons’ earnings rose 2.3%, to $80.7 million from $78.9 million. Earnings per share rose 6.7%, to $0.48 from $0.45, on fewer shares outstanding. That fell short of the consensus estimate of $0.51 a share.

Sales rose 10.4%, to $643.5 million from $582.6 million a year earlier. The company opened 31 new restaurants in Canada during the quarter. That brings its total number of Canadian stores to 3,169. Same-stores sales rose 2.0% in Canada.

In the U.S., Tim Hortons opened six restaurants and five self-serve kiosks. It now has 613 U.S. outlets. Same-store sales rose 4.9% in the U.S.

If your portfolio investing involves more aggressive picks like Tim Hortons, you should have a subscription to Stock Pickers Digest. What’s more, you can get the latest issue absolutely free. Click here to learn how.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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