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Burger King: Crown and Virus

Operator of fast food restaurants

04.06.2020 shares were sold at the price of $58.8. The investment idea brought 30.67% return in 43 days.

About company

Ticker: QSR 
Buy market: $45 
Take profit: $60

Restaurant Brands International Inc. (NYSE: QSR) – operator of fast food restaurants. The company operates more than 26,000 restaurants under the brands Burger King, Tim Hortons, Popeyes.

Positive sides

  • The market of fast food restaurants is growing by more than 4% per year and will reach more than $690 billion by 2022 according to Zion Market Research.
  • Due to the possibility of serving guests from the car, some of the company’s restaurants suffered less than the classic business models.
  • In our opinion, after the quarantine is lifted, the fast food restaurant market will recover faster than the classic restaurant business, due to a decrease in real incomes.
  • Over the past year, the company showed a 5.1% increase in profits compared to an average growth of 1.6% in the industry.
  • In the current situation of economic uncertainty, an important indicator is the current ratio. It allows you to determine the ability of the company to pay for its short-term obligations. Restaurant Brands International has this indicator at 1.29, that is, liquid assets cover 29% of short-term liabilities.

Competitive analysis

Restaurant Brands International looks stronger than its direct competitors in fundamental terms.

 Restaurant Brands Int   McDonald’s   Starbucks   Yum! Brands
PE   17.7   22.3   23.5   19.2
Current ratio   1.29   0.98   0.68   0.99
Dividend Yield      4.91%   2.82%   2.26%   2.32%

Риски

  • A high share of borrowed capital to equity – 282%.
  • The second wave of new coronavirus infection and repeated quarantines.

Summary

Restaurant Brands International seems undervalued in relation to the market. In the medium term, we expect stock prices to increase by more than 30%, due to the increase in the number of consumers in the more accessible segment after the abolition of quarantines around the world.