Is Restaurant Brands International (QSR) Fairly Priced After Recent Share Price Volatility

• If you are wondering whether Restaurant Brands International at around US$76.44 is priced attractively or not, you are in the right place to unpack what the current share price may be implying about value.
• The stock is up 12.7% year to date and 13.8% over the past year, even though it has fallen 3.4% over the last week and 2.7% over the past month. These changes can influence how investors view both opportunity and risk.
• Recent headlines have focused on Restaurant Brands International's position in the global quick service restaurant sector and how the company is competing with peers on scale and brand reach. This context helps explain why the stock can react quickly when there are updates around store growth, brand performance, or capital allocation.
• Right now the company scores a 3 out of 6 valuation score. The rest of this article will break down what different valuation methods suggest about that price, before finishing with a simple way to see how all of these pieces fit together.

Restaurant Brands International delivered 13.8% returns over the last year. See how this stacks up to the rest of the Hospitality industry.

Approach 1: Restaurant Brands International Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model projects a company’s future cash flows and then discounts those projections back to today’s dollars, aiming to estimate what the business might be worth right now based on its cash generation.

For Restaurant Brands International, the model used here is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections. The latest twelve month free cash flow is about $1.51b. Looking ahead, analysts and extrapolations point to projected free cash flow of $2.20b in 2028, with additional estimates running out to 2035, all expressed in $ and discounted back to today using Simply Wall St’s methodology.

Bringing all of those discounted cash flows together gives an estimated intrinsic value of about $82.97 per share. Compared with the current share price of around $76.44, this DCF output suggests the stock is trading at roughly a 7.9% discount, which indicates a relatively small gap rather than a deep value signal.

Result: ABOUT RIGHT

Restaurant Brands International is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Restaurant Brands International.

Approach 2: Restaurant Brands International Price vs Earnings

For a profitable company, the P/E ratio is a useful way to relate what you pay for the stock to the earnings the business is currently generating. It helps you see how many dollars investors are willing to pay today for each dollar of earnings.

What counts as a “normal” P/E depends a lot on expectations and risk. Higher expected earnings growth or more stable earnings can support a higher P/E, while slower expected growth or higher perceived risk usually aligns with a lower P/E.

Restaurant Brands International currently trades on a P/E of 24.6x. That sits above the Hospitality industry average of 20.1x, but below the average of its peers at 36.2x. Simply Wall St’s Fair Ratio for the company is 29.3x. This Fair Ratio is a proprietary estimate of what the P/E might be given factors such as earnings growth, profit margins, industry, market cap and company specific risks.

Because the Fair Ratio blends these elements, it can be more tailored than a simple comparison with peers or the industry alone. With the current P/E at 24.6x versus a Fair Ratio of 29.3x, the stock is described as undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Restaurant Brands International Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St’s Community page let you attach a clear story to Restaurant Brands International’s numbers by linking your view of its future revenue, earnings and margins to a forecast, turning that into a fair value and then comparing it with the current share price. Because Narratives update when new news or earnings arrive, you can see in real time how different investors can look at the same facts yet reach very different fair values, such as the most bullish analyst Narrative for Restaurant Brands International at US$96.00 and the most cautious at US$77.00. You can then use that range to consider whether the stock looks closer to your own buy, hold or sell thresholds.

Do you think there's more to the story for Restaurant Brands International? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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