DCF Studio

    QSR.TO · TOR · Consumer Cyclical

    Restaurant Brands International Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 197.83

    Market price

    CAD 102.05

    Implied upside

    +93.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.3982

    AdjustedReports in USD, trades in CAD. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Current EV/EBITDA of 21.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    CAD 197.83+93.9%
    Exit multiple
    CAD 257.52+152.4%
    Market price
    CAD 102.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 10.7bnUSD 12.1bnUSD 13.7bnUSD 15.5bnUSD 17.5bn+13.2%
    EBITUSD 3.1bnUSD 3.5bnUSD 3.9bnUSD 4.4bnUSD 5.0bn+13.2%
    NOPATUSD 2.3bnUSD 2.6bnUSD 3.0bnUSD 3.4bnUSD 3.8bn+13.2%
    Add depreciation & amortisationUSD 319.6mUSD 361.8mUSD 409.5mUSD 463.5mUSD 524.7m+13.2%
    Less capital expenditureUSD -225.5mUSD -255.2mUSD -288.9mUSD -327.0mUSD -370.2m+13.2%
    Less increase in working capitalUSD -82.3mUSD -93.2mUSD -105.5mUSD -119.4mUSD -135.1m+13.2%
    Free cashflow to firmUSD 2.3bnUSD 2.6bnUSD 3.0bnUSD 3.4bnUSD 3.8bn+13.2%
    Discount factor0.97160.91720.86590.81740.7717-
    Present valueUSD 2.3bnUSD 2.4bnUSD 2.6bnUSD 2.8bnUSD 2.9bn+6.9%
    Present Value Of The ForecastUSD 13.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.688Reported 0.534, pulled toward 1.0 (Blume)
    Cost of equity7.08%Risk-free + beta x equity risk premium
    Cost of debt3.30%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 46.8bn74.9% of capital
    Total debtUSD 15.7bn25.1% of capital, book value as a proxy
    Tax rate24.4%Effective, capped at statutory
    WACC5.93%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 141.49

    84% of EV

    Forecast FCFF, final year
    USD 3.8bn
    Capex at depreciation, working capital in reinvestment
    USD 3.8bn
    Less reinvestment at g/ROIC (24.5% of NOPAT)
    USD -931.9m
    Capitalised
    USD 2.9bn
    ROIC (reported)
    10.2%
    Terminal value, undiscounted
    USD 85.8bn
    Terminal value, discounted
    USD 66.2bn
    Enterprise value
    USD 79.2bn
    Less net debt
    USD 14.5bn
    Equity value
    USD 64.7bn

    Exit at 20.0x EBITDA

    Value per shareUSD 184.18

    87% of EV

    Terminal value, undiscounted
    USD 111.1bn
    Terminal value, discounted
    USD 85.7bn
    Enterprise value
    USD 98.7bn
    Less net debt
    USD 14.5bn
    Equity value
    USD 84.2bn

    Spread between methods: 26%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.93%247.43295.48376.92545.641106.76
    4.93%166.50184.92210.79249.90316.15
    5.93%122.10130.60141.49155.99176.33
    6.93%94.0598.30103.43109.80117.94
    7.93%74.7176.8779.3682.3085.84

    Outlined: this model. Green text: above today's price of 72.99. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year13.2%1.4%-11.7pp
    EBIT margin28.7%17.3%-11.4pp
    Discount rate5.9%8.3%+2.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.