Restaurant Brands Int'l Earnings: Sales Momentum Encouraging but Franchise Health Concerns Linger

Narrow-moat Restaurant Brands International, or RBI, posted solid first-quarter earnings, with every brand but Tim Hortons Canada seeing acceleration in sales momentum relative to the comparable 2019 period. While the near-term restaurant macroenvironment provides plenty of reasons for trepidation, we derive cautious optimism from modest early signs of improvement at Burger King U.S. and RBI's growing Tim Hortons and Popeyes international businesses. On balance, the quarter clocked in largely in line with our expectations, and we expect to raise our $65 fair value estimate by a low-single-digit percentage, consistent with time value.