Restaurants Brand International (TSX: QSR) is a quick-service restaurant operating in the US, Canada, and globally. This company owns four of the most recognized fast-food brands. They are Burger King, Popeye’s Louisiana’s Kitchen, Tim Horton, and Firehouse Subs.
With a major acquisition in 2024, this company aims to dominate with its market presence in the fast food industry sector. Analysts consider QSR stock as a boost for your portfolio in 2024.
Let’s dive into why that’s the case.
Key acquisition paves the way for key upgrades
To penetrate deeper and establish a strong brand presence in the fast food industry, Restaurant Brands International is set to acquire Carrols Restaurant Group. It is a Burger King subsidiary and the largest US franchise of the brand.
According to several news reports, the franchisee owns 15% of Burger King’s US network and holds 1,022 restaurants in 23 states. Carrols also has 60 Popeyes restaurants in 6 states.
Restaurant Brands International will soon acquire Carrols Restaurants at approximately $1 billion. With this move, Restaurant Brands appears determined to reclaim its status and establish better customer experiences. Post-acquisition, Restaurant Brands aims to franchise its outlets to local operators.
Analysts consider this a strategic move on the company’s part to enhance its portfolio in the fast food industry. This company’s shares received a 17.9% boost in the past three months compared to the industry’s growth rate of 10.1%.
Strong dividend profile
Restaurant Brands’ dividend profile is something I don’t think gains enough attention. Indeed, the company’s soaring stock price has led to a reduced yield (2.8% at the time of writing), making this stock relatively unattractive compared to other higher-yielding bond proxies.
That said, the company’s strong cash flow growth over time and reasonable payout ratio suggest there could be room for further increases over time. In particular, Restaurant Brands’ untapped growth at the international level is something that could lead to such hikes, as well as top- and bottom-line growth over time.
Recent move to a 52-week high signals strong momentum
In this uncertain economic environment, investors appear to be increasingly taking a more defensive posture. Overall, that’s a broadly bullish trend for quick service restaurant providers, given the relatively inelastic demand these companies see across business cycles.
This positioning is a key driver of Restaurant Brands’ recent stock price move to 52-week highs. No matter what the economic backdrop, folks need to eat. And while dining out is one expense most consumers will cut back on when times get tight, Restaurant Brands’ core banners provide the kind of value and quality many consumers are after.
It’s my view that the company’s relatively insulated fundamentals provide one of the strongest bull theses in the market right now. For long-term investors looking to position defensively for the next few years, QSR stock will likely remain in high demand.
Bottom line
As 2024 continues, Restaurant Brands will aim to continue strengthening its brand presence in both new and existing markets. The company’s recent $1 billion franchisee takeover is a catalyst I view as positive, alongside the market. As stores get revamped and continued menu improvements materialize, this is a stock that could see its revenue and growth rates heat up. For fundamental value investors, that’s a good thing.
Overall, Restaurant Brands appears to be firing on all cylinders right now. Accordingly, it should be no surprise this stock trades at a premium. Even at these levels, I think QSR stock remains a buy, and I’m going to consider adding this stock on any weakness moving forward.
