Burger King Parent’s Stock Rises After Sales Beat

Burger King Parent’s Stock Rises After Sales Beat
Written by:
Michael Harris
April 3, 2020
  • Earnings per share: $0.75 adjusted, vs. $0.73 cents expected
  • Revenue: $1.48 billion vs. $1.46 billion expected
  • Chicken sandwiches help Popeyes’ sales grow by 34%
  • Stock trades nearly 3% with more room for growth

Shares of Restaurant Brands International, a parent company of fast-food chain Burger King, Popeyes, and Tim Hortons, rose nearly 3% on Monday after the company said its fourth-quarter sales rose almost 7% to $1.48 billion, slightly better than the $1.46 billion expected from the market analysts.

“We have three iconic restaurant brands that are together growing rapidly around the world. Last year, we shared a long-term aspiration to build the most loved restaurant brands in the world and have more than 40,000 restaurants open within 8-10 years. I’m proud that our 2019 results have us solidly on track,” said CEO Jose Cil.

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Moreover, the company posted earnings of $0.75 per share, again topping analysts’ expectations of $0.73 per share. Net income for the quarter came at $257 million, down from $301 million in the previous year.

Tim Hortons, Canada’s largest quick service restaurant chain, reported a fall in the same-store sales by 4.3% due to a slowdown in the domestic market.

“At Tim Hortons, our performance did not reflect the incredible power of our brand and it is clear that we have a large opportunity to refocus on our founding values and what has made us famous with our guests over the years, which will be the basis for our plan in 2020,” added Cil.

A poor performance from Tim Hortons was largely offset by a stunning sales report from Popeyes, a fried chicken fast food restaurants, which saw its same-store sales grow by 34% during the quarter, on the back of the Louisiana Kitchen’s chicken sandwich.

Popeyes launched an iconic Chicken Sandwich that has proven to be a game changer for the brand in every way.

Finally, Burger King’s global same-store sales grew by 2.8%, including a rise of 0.6% in the United States. The fast food giant previously reported a rise of 5% in the third-quarter for the U.S. market.

Technical analysis: Plenty of room for recovery

Restaurant Brands International stock price jumped nearly 3% on better-than-expected earnings. Just a week ago, the stock hit a 11-month low of $60.78. The stock price closed at $65.61 after the positive earnings report.

Restaurant Brand International (QSR) stock daily chart (TradingView)

As seen in the chart above, the price action has broken out of the descending channel that kept the price trapped in the previous three months. The bulls are now close to testing the 100-DMA resistance at $66.41. If they persist at buying the Restaurant Brands International stock, we can see a test of the 200-DMA, located above the $68 mark this week as well.

Summary

Shares of Restaurant Brand International rose almost 3% on the positive earnings report. While Tim Hortons’ sales disappointed, Popeyes smashed expectations in delivering another strong quarter for its parent company.