Burger King's Parent Company Shows Growth Prospects Have Improved, This Analyst Says In Upgrade

Restaurant Brands International Inc (RBI) QSR issued its fourth-quarter results on Tuesday that highlighted sales growth in key areas, which lead an analyst at KeyBanc Capital Markets to upgrade the stock.

By The Numbers: The company reported a 9.3% year-on-year increase in sales, reaching $1.69 billion, exceeding market consensus of $1.67 billion.

The company's adjusted EPS of $0.72 missed the analyst consensus of $0.74.

Consolidated comparable sales also demonstrated strong growth, increasing by 7.9%. Sales growth was led by Tim Horton's with an increase of 9.4%, Burger King with an 8.4% increase and Popeyes Louisiana Kitchen with a 3.8% growth rate.

Digital sales saw significant growth, rising by 30% year-on-year to $13.5 billion in 2022.

Check out more analyst ratings here. 

The KeyBanc Analyst: Eric Gonzalez upgraded the company from a Sector Weight rating to an Overweight rating, establishing a price target of $76.

Gonzalez said in a Wednesday upgrade note that despite the recent EBITDA drawdown, profitability should continue to improve.

The analyst noted the company is on track to restore its development pipeline, with solid same-store sales growth and robust demand for Popeyes Louisiana Kitchen in the U.S.

RBI's transparent financials, growth prospects and cost culture provide room for multiple expansions, which could result in mid-teens total return, Gonzalez said.

The company held $1.2 billion in cash and equivalents as of Dec. 31, 2022, with net cash provided by operating activities for the year reaching $1.5 billion.

Gonzalez said strong sales growth and digital sales increase demonstrate the company's ability to navigate the challenges faced by the industry.

RBI Price action: Shares of RBI are trading 0.30% lower to $65.89, according to data from Benzinga Pro.

Read Next: Franchisee Profit Takes Center Stage Going Forward For Restaurant Brands, Says Analyst

Photo: RBI