Earnings Season: RBI Q3 released

Restaurant Brand Internasional Q3 earnings:

$Restaurant(QSR)$

For those who dont know this company, they are the owner of Burger King, Tim Hortons, Popeyes.

They have 27000 restaurant in 100 countries. 

Here are my key takeaways for Q3 Earnings:

1. In 3 months ending 30th September, revenue has reached a record of $1.5Bn. The figure was $1.34Bn last year Q3.

2. Net income has increased to $353M uo frok the recorded Q3 2020 net incoke of $320M. Adjusted diluted earnings per share has increased from 0.68 to $0.76 this year. 

3. Reason for this good result is contributed bby Burger King's system wide sales grewing 12.3% while Tim hortons increased 11.1%. Popeye achieved a 4.4% increased in sales growth as well. 

4. CEO of RBI, Jose Cil said they are opening more outlets internasionally, and they are targeting 4000 outlets. 

5. CEO has also highligted covid-19 induced labor challenges continued. Some locations operated with reduced operating hours due to staff shortage. However, the company is working on it currently and it should be solved soon.

6. With the whole world reopening back their economy once again from Covid-19 pandemic, and workers going back to work from office, fast food shall once again be a part of the lifestyle of the working adults. 

My conclusion:

1. Earnings and free cash flow has been increasing in the past 5 years. 

2. My fair value based on current free cash flow of 1B and 6% discount rate and a 9.2% growth rate shows that this company intrinsic value is $84. (33% undervalued)

3. Company has high debt of 309.8% Debt to Equity. However, debt is covered by operating cash flow by 12.3%, so the company is okay. 

Should you buy Restaurant Brand internasional?

Food business never goes out of business. Its an essential and everyone loves to eat! So I think RBI will be a good add to everyones portfolio!