It was just announced that the parent company of Tim Horton's, QSR.TO Restaurant Brands International, has just entered bear market territory. What happened to the stock that hammered it down off it's high of $88.36 reached in October of 2017? It closed today down 29% at $68.26. OUCH!
Not that I know a lot about timing the selling of stocks, but I did sell my 100 shares back in May of 2017 at $75.83. Looking back I sold early and left some on the table but I did make a $2K gain.
I thought I would own Tim Horton's forever but the dividend yield at the time was too low for me entering retirement. I sold based on my gain at the time and my new found desire to generate income for retirement.
This was before all the head office turmoil in the news lately and some franchise owners desire to pass on the new minimum wage costs to their employees. The shares of QSR have been on a death spiral ever since.
Technically the stock started breaking down right after the New Year and since dropping below it's 200DMA it's dropped another 8%.
The Numbers
P/E 20.9ROE 31%
Dividend Yield 1.9%
Annual Dividends $1.05
Payout Ratio 40%
Stock trades at a premium to the market and is expensive. Most of the problems with this company right now are with head office and investor relations. They have also requested franchisees foot the bill of a company wide face lift for all Tim's locations. This has been a red flag for institutions because it is seen as eating into the bottom line to the tune of $40M for each restaurant. The company will announce earnings 24 April 2018.
The Food
What can I say. This is just fried bread, burgers and southern fried chicken. I'm no expert but I'm pretty sure health conscious consumers are eating a lot less doughnuts, red meat and deep fried foods than they used to.
I just don't see the growth in this casual fast food sector of the industry, at least not with QSR. Coffee in Canada used to be it's big winner but even there, same store sales are trending down. Note to Tim's - your coffee tastes burnt! This could be why. In a recent survey consumers ranked Tim's coffee behind McDonald's, Second Cup and Starbucks. It is no longer Canada's favourite coffee.
Burger King is also not a place my kids or friends flock to. This is an American centric phenomenon that can't be accurately compared to Canadian locations. Popeye's is a new addition and I have no idea what sales are like here in the Great White North.
Is It a Buy
I would wait until after earnings are released and if they are good I would say it's a screaming buy on price and sales.
I'm glad I sold when I did but if you like buying stocks when they have been beaten down and on sale, QSR could end up being a winner. Right now the headwinds are blowing too strong and the dividend too low and not growing enough for me to step in and buy.
Do you own Restaurant Brands? Would you buy it here?
Do you own Restaurant Brands? Would you buy it here?
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