Restaurant Brands stock forecast after buying Firehouse Subs for $1 billion

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Nov 15, 2021
  • Restaurant Brands shares edged higher 1.3%after buying Firehouse Subs.
  • The Canadian fast-food holding company is buying the Florida-based restaurant chain for $1 billion.
  • The all-cash deal is expected to boost QSR’s earnings per share.

On Monday, Restaurant Brands International Inc. (NYSE:QSR) shares edged higher 1.3% after announcing the purchase of Firehouse Subs. The Canadian fast-food holding company is buying the Jacksonville, Florida-based restaurant chain in an all-cash deal valued at $1 billion.

The company expects the purchase to positively impact its earnings per share, thereby potentially boosting the stock price. The acquisition could also be accretive in Restaurant Brands International’s growth strategy in the US and globally. 

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Commenting on the acquisition, the company wrote:

We see tremendous potential to accelerate U.S. and international growth at Firehouse Subs with RBI’s development expertise, global franchise network and digital capabilities.

Is it time to bet on growth?

From an investment perspective, QSR shares trade at reasonable trailing 12-month and forward P/E ratios of 23.64 and 19.20, respectively. Therefore, value investors could consider it ahead of potential growth synergies from its Firehouse Subs acquisition.

In addition, analysts expect Restaurant Brands International’s earnings per share to increase at an average annual rate of 19.13% over the next five years. Therefore, the stock could also gain the attention of growth investors.

The stock has plunged by nearly 18% since the start of June, creating an exciting opportunity to buy

Source – TradingView

Technically, Restaurant Brands shares seem to be trading within a descending channel formation in the intraday chart. However, the stock has recently bounced back to avoid slipping into the oversold conditions of the 14-day RSI.

Therefore, with shares still far from reaching overbought conditions, investors could target extended gains at about $60.09, or higher at $63.13, while $54.60 and $51.88 are crucial support zones.

Buy the rebound?

In summary, with Restaurant Brands shares plummeting by nearly 18% over the last five months, the current valuation multiples represent an exciting opportunity to buy.

Therefore, with shares far from reaching overbought conditions, it may not be too late to buy the rebound.

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