Restaurant Brands International Earnings: Strong Global Comparable Sales Despite Tough Backdrop

Narrow-moat Restaurant Brands International, or RBI, reported surprisingly strong quarterly results, with 4.6% global comparable store sales growth topping our 4.2% estimate despite challenging January weather in the US, a 60-basis-point headwind from the conflict in the Middle East, and a soft macroenvironment. The results attest to strong menu innovation, a turnaround in the Burger King US segment, and reasonable global value positioning. We're encouraged by momentum in the firm's Popeyes, Tim Hortons, and international segments, and continue to expect RBI to achieve its long-term growth algorithm for 5% unit growth and 8% or better growth in core operating profit (on average) over the next five years, which it maintained. As we digest results, we plan to increase our $77 and CAD 104 fair value estimates by a low-single-digit and mid-single-digit percentage, respectively, consistent with time value of money and a strengthening US dollar.