Restaurant Brands Int'l Earnings: We Appreciate Stepped-Up Investments in Stores and Brands

While narrow-moat Restaurant Brand International's fourth-quarter earnings offered several key moving pieces, we believe investors' key takeaway should be that improving store-level profitability, a growing digital business, and traffic improvements across brands provide a firmer base than we'd expected from which to drive long-term systemwide sales growth. We expect to lift our 10-year systemwide sales compound annual growth rate projection to 6.1% from 5.5% after digesting results, leading to a high-single-digit percentage increase to our CAD 93 and USD 71 fair value estimates. That will leave shares trading in a range we'd consider fairly valued after a 3%-4% decline in Feb. 13 intraday trading.