Shares Of Burger King, Tim Hortons Parent Restaurant Brands International Trade In Tight Consolidation

The still-new parent of Burger King and Tim Hortons, Restaurant Brands International Inc. (NYSE: QSR), has seen its shares trade in a tight, shallow, saucer-like pattern since being created, rallying and holding gains in December 2014 as the result of an amalgamation of Restaurant Brands International, Burger King and Tim Hortons.

Burger King, who are perhaps known for their edgy advertising, has taken to cursing in prepared statements. Burger King Chief Marketing Officer Eric Hirschhorn was recently quoted in New York by the Street,“We wanted to create something as spicy as sh**, that it was so spicy that it may even offend you.”

The strategy appears to be working for Burger King and parent, over the past 90 days the consensus analyst earnings per share estimates for 2015 and 2016 have been ratcheted up 8.1 percent and 11.4 percent respectively to $1.06 and $1.07. These numbers will represent year-over-year growth of 251.4 percent this year and 19.8 percent next – pretty good for two decades-old brands like Burger King and Tim Hortons.

Shares of the Burger King parent are up 9.1 percent in 2015. Shares closed at $42.60 on Friday, 6.8 percent below all-time highs of $45.71 printed on February 27. More recent resistance can been seen near $44.60.

Shares of Restaurant Brands International.

Burger King and Tim Hortons Combined in 2014

Burger King and Tim Hortons were combined in a December 2014 deal that saw old Burger King (NYSE: BKW) and Tim Hortons (NYSE: THI) shareholders receive stakes with a new parent. Restaurant Brands International now owns the Burger King and Tim Hortons brands.

The combined Burger King/Tim Hortons entity is forecast to report sales of $1.05 billion this quarter and $1.07 billion next quarter. Combined Burger King/Tim Hortons sales are forecast to fall 2.7 percent to $4.1 billion in 2015 and then grow 6.6 percent to $4.4 billion in 2016.

Tim Hortons was purchased by Restaurant Brands International.

Restaurant Brands International carries $8.86 billion in debt, giving Burger King and Tim Hortons a debt to equity ratio of 129.5 percent. When looking at companies with high debt to equity ratios many investors like to see healthy return on equity figures or profit margins to give management some type of a cushion with levered operations.

The Burger King/Tim Hortons parent has a dismal return on equity of -6.42 percent. An operating margin of 25.7 percent may be a saving grace, but even consideration of that must be tempered by the much less encouraging profit margin of 6.0 percent.

The Burger King/Tim Hortons owner beat analyst EPS consensus forecasts on July 27, reporting $0.30 per share, $0.06 ahead of expectations. Shares rallied for over a week following the news, topping at $44.60: the local resistance point noted above.

[Burger King Photo by Justin Sullivan/Getty Images – Tim Hortons Photo by Spencer Platt/Getty Images]