Assessing Restaurant Brands International (TSX:QSP.UN) Valuation Following Recent Share Price Gains

Restaurant Brands International Limited Partnership (TSX:QSP.UN) stock has seen steady gains over the past month, catching the attention of investors looking for consistency. With these recent moves, it is a good moment to revisit the company’s ongoing performance and outlook.

See our latest analysis for Restaurant Brands International Limited Partnership.

The momentum in Restaurant Brands International Limited Partnership’s share price has picked up lately, reflecting renewed confidence as investors respond to its consistent performance. The stock has delivered a healthy 6.32% share price return so far this year, with its total shareholder return reaching 6.55% over the past twelve months and 51.51% over five years. These are signs that long-term holders have been well rewarded.

If you’re keeping an eye on steady performers, this could be the perfect moment to widen your search and discover fast growing stocks with high insider ownership

The recent uptick in share price raises a timely question: Is Restaurant Brands International Limited Partnership currently trading below its true value, or has the market already factored in the company's future growth potential?

Price-to-Earnings of 18.1x: Is it justified?

Based on its current price-to-earnings (P/E) ratio of 18.1x, Restaurant Brands International Limited Partnership trades slightly below its peer group. This suggests the market may be undervaluing its earning power as of the last close price of CA$97.09.

The price-to-earnings ratio shows how much investors are willing to pay for each dollar of earnings. This metric is especially significant in sectors like Hospitality, where stable cash flows and profitability are key benchmarks. For Restaurant Brands International Limited Partnership, a P/E of 18.1x contrasts with the peer average of 18.9x and the North American Hospitality industry average of 19.5x. This indicates the stock is priced conservatively relative to comparable companies.

This discount means investors could be pricing in slower growth expectations or potential risks, despite the company’s demonstrated growth over the past five years. Yet, with a record of high quality earnings and steady dividend payouts, the current multiple may offer an appealing entry point for those seeking value in a proven operator.

Compared to industry norms and company peers, Restaurant Brands International Limited Partnership appears modestly undervalued. The lower P/E multiple signals a conservative market view and represents an opportunity if future earnings regain momentum and sentiment shifts accordingly. Although a fair ratio is not available for this stock, current valuations show the market could re-rate higher with improved growth prospects.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 18.1x (UNDERVALUED)

However, risks remain. Changes in consumer spending or industry competition could impact Restaurant Brands International Limited Partnership's future performance.

Find out about the key risks to this Restaurant Brands International Limited Partnership narrative.

Another View: Discounted Cash Flow Perspective

Looking at valuation from a different angle, our DCF model suggests Restaurant Brands International Limited Partnership may be trading at a 9.9% discount to its estimated fair value of CA$107.72 per share. This offers a fresh take on potential upside. However, how much weight should investors give to each approach?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Restaurant Brands International Limited Partnership for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 879 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Restaurant Brands International Limited Partnership Narrative

If you have a different perspective or prefer digging into the numbers on your own, you can craft your own narrative in just a few minutes. Do it your way.

A great starting point for your Restaurant Brands International Limited Partnership research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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