Intrinsic value of Restaurant Brands International Inc. - QSR

Previous Close

$78.52

  Intrinsic Value

$38.67

stock screener

  Rating & Target

str. sell

-51%

Previous close

$78.52

 
Intrinsic value

$38.67

 
Up/down potential

-51%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of QSR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 36.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.30
  12.40
  11.66
  10.99
  10.39
  9.86
  9.37
  8.93
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
Revenue, $m
  5,601
  6,296
  7,030
  7,802
  8,613
  9,462
  10,349
  11,273
  12,236
  13,238
  14,279
  15,361
  16,486
  17,655
  18,870
  20,133
  21,446
  22,813
  24,235
  25,716
  27,258
  28,867
  30,544
  32,293
  34,120
  36,027
  38,020
  40,103
  42,281
  44,558
  46,942
Variable operating expenses, $m
 
  4,429
  4,872
  5,338
  5,828
  6,340
  6,874
  7,432
  8,013
  8,617
  9,245
  9,266
  9,945
  10,650
  11,383
  12,145
  12,937
  13,761
  14,619
  15,513
  16,443
  17,413
  18,425
  19,480
  20,582
  21,733
  22,935
  24,191
  25,505
  26,879
  28,317
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,349
  4,429
  4,872
  5,338
  5,828
  6,340
  6,874
  7,432
  8,013
  8,617
  9,245
  9,266
  9,945
  10,650
  11,383
  12,145
  12,937
  13,761
  14,619
  15,513
  16,443
  17,413
  18,425
  19,480
  20,582
  21,733
  22,935
  24,191
  25,505
  26,879
  28,317
Operating income, $m
  2,252
  1,866
  2,157
  2,464
  2,786
  3,123
  3,474
  3,841
  4,223
  4,621
  5,034
  6,095
  6,541
  7,005
  7,487
  7,988
  8,509
  9,051
  9,615
  10,203
  10,815
  11,453
  12,119
  12,813
  13,538
  14,294
  15,085
  15,911
  16,775
  17,679
  18,625
EBITDA, $m
  2,485
  3,069
  3,427
  3,804
  4,200
  4,613
  5,046
  5,496
  5,966
  6,454
  6,962
  7,490
  8,038
  8,608
  9,200
  9,816
  10,456
  11,123
  11,816
  12,538
  13,290
  14,074
  14,892
  15,745
  16,636
  17,566
  18,537
  19,553
  20,615
  21,725
  22,887
Interest expense (income), $m
  550
  548
  657
  773
  896
  1,025
  1,160
  1,300
  1,447
  1,600
  1,759
  1,924
  2,096
  2,275
  2,461
  2,653
  2,854
  3,063
  3,280
  3,505
  3,741
  3,986
  4,241
  4,507
  4,785
  5,075
  5,378
  5,695
  6,025
  6,371
  6,733
Earnings before tax, $m
  1,621
  1,318
  1,501
  1,691
  1,890
  2,098
  2,315
  2,541
  2,776
  3,021
  3,275
  4,170
  4,445
  4,730
  5,026
  5,335
  5,655
  5,989
  6,336
  6,698
  7,075
  7,468
  7,878
  8,306
  8,752
  9,219
  9,707
  10,217
  10,750
  11,308
  11,892
Tax expense, $m
  330
  356
  405
  457
  510
  566
  625
  686
  750
  816
  884
  1,126
  1,200
  1,277
  1,357
  1,440
  1,527
  1,617
  1,711
  1,808
  1,910
  2,016
  2,127
  2,243
  2,363
  2,489
  2,621
  2,759
  2,903
  3,053
  3,211
Net income, $m
  832
  962
  1,096
  1,234
  1,380
  1,532
  1,690
  1,855
  2,027
  2,205
  2,391
  3,044
  3,245
  3,453
  3,669
  3,894
  4,128
  4,372
  4,625
  4,889
  5,164
  5,451
  5,751
  6,063
  6,389
  6,730
  7,086
  7,458
  7,848
  8,255
  8,681

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,973
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  25,839
  26,789
  29,913
  33,202
  36,653
  40,265
  44,038
  47,972
  52,068
  56,330
  60,762
  65,367
  70,154
  75,128
  80,297
  85,671
  91,260
  97,075
  103,126
  109,428
  115,993
  122,837
  129,973
  137,419
  145,191
  153,308
  161,787
  170,650
  179,917
  189,610
  199,751
Adjusted assets (=assets-cash), $m
  23,866
  26,789
  29,913
  33,202
  36,653
  40,265
  44,038
  47,972
  52,068
  56,330
  60,762
  65,367
  70,154
  75,128
  80,297
  85,671
  91,260
  97,075
  103,126
  109,428
  115,993
  122,837
  129,973
  137,419
  145,191
  153,308
  161,787
  170,650
  179,917
  189,610
  199,751
Revenue / Adjusted assets
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
Average production assets, $m
  15,255
  17,149
  19,149
  21,254
  23,463
  25,775
  28,190
  30,709
  33,331
  36,059
  38,896
  41,844
  44,908
  48,092
  51,401
  54,842
  58,419
  62,141
  66,015
  70,049
  74,252
  78,633
  83,201
  87,967
  92,943
  98,138
  103,567
  109,240
  115,172
  121,377
  127,869
Working capital, $m
  1,197
  -730
  -815
  -905
  -999
  -1,098
  -1,200
  -1,308
  -1,419
  -1,536
  -1,656
  -1,782
  -1,912
  -2,048
  -2,189
  -2,335
  -2,488
  -2,646
  -2,811
  -2,983
  -3,162
  -3,349
  -3,543
  -3,746
  -3,958
  -4,179
  -4,410
  -4,652
  -4,905
  -5,169
  -5,445
Total debt, $m
  11,785
  13,972
  16,452
  19,063
  21,803
  24,672
  27,667
  30,790
  34,043
  37,427
  40,946
  44,603
  48,403
  52,352
  56,457
  60,724
  65,162
  69,778
  74,583
  79,587
  84,800
  90,233
  95,900
  101,812
  107,983
  114,427
  121,160
  128,197
  135,555
  143,251
  151,303
Total liabilities, $m
  19,085
  21,271
  23,751
  26,362
  29,102
  31,971
  34,966
  38,089
  41,342
  44,726
  48,245
  51,902
  55,702
  59,651
  63,756
  68,023
  72,461
  77,077
  81,882
  86,886
  92,099
  97,532
  103,199
  109,111
  115,282
  121,726
  128,459
  135,496
  142,854
  150,550
  158,602
Total equity, $m
  6,755
  5,519
  6,162
  6,840
  7,551
  8,295
  9,072
  9,882
  10,726
  11,604
  12,517
  13,466
  14,452
  15,476
  16,541
  17,648
  18,800
  19,997
  21,244
  22,542
  23,895
  25,304
  26,774
  28,308
  29,909
  31,581
  33,328
  35,154
  37,063
  39,060
  41,149
Total liabilities and equity, $m
  25,840
  26,790
  29,913
  33,202
  36,653
  40,266
  44,038
  47,971
  52,068
  56,330
  60,762
  65,368
  70,154
  75,127
  80,297
  85,671
  91,261
  97,074
  103,126
  109,428
  115,994
  122,836
  129,973
  137,419
  145,191
  153,307
  161,787
  170,650
  179,917
  189,610
  199,751
Debt-to-equity ratio
  1.745
  2.530
  2.670
  2.790
  2.890
  2.970
  3.050
  3.120
  3.170
  3.230
  3.270
  3.310
  3.350
  3.380
  3.410
  3.440
  3.470
  3.490
  3.510
  3.530
  3.550
  3.570
  3.580
  3.600
  3.610
  3.620
  3.640
  3.650
  3.660
  3.670
  3.680
Adjusted equity ratio
  0.200
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  832
  962
  1,096
  1,234
  1,380
  1,532
  1,690
  1,855
  2,027
  2,205
  2,391
  3,044
  3,245
  3,453
  3,669
  3,894
  4,128
  4,372
  4,625
  4,889
  5,164
  5,451
  5,751
  6,063
  6,389
  6,730
  7,086
  7,458
  7,848
  8,255
  8,681
Depreciation, amort., depletion, $m
  233
  1,203
  1,270
  1,340
  1,414
  1,491
  1,571
  1,655
  1,743
  1,834
  1,928
  1,395
  1,497
  1,603
  1,713
  1,828
  1,947
  2,071
  2,201
  2,335
  2,475
  2,621
  2,773
  2,932
  3,098
  3,271
  3,452
  3,641
  3,839
  4,046
  4,262
Funds from operations, $m
  1,718
  2,166
  2,365
  2,574
  2,793
  3,022
  3,261
  3,510
  3,769
  4,039
  4,319
  4,439
  4,742
  5,056
  5,383
  5,722
  6,076
  6,443
  6,826
  7,224
  7,640
  8,072
  8,524
  8,995
  9,487
  10,001
  10,538
  11,100
  11,687
  12,301
  12,943
Change in working capital, $m
  3
  -81
  -85
  -90
  -94
  -98
  -103
  -107
  -112
  -116
  -121
  -126
  -130
  -136
  -141
  -147
  -152
  -159
  -165
  -172
  -179
  -187
  -195
  -203
  -212
  -221
  -231
  -242
  -253
  -264
  -276
Cash from operations, $m
  1,715
  2,246
  2,451
  2,664
  2,887
  3,121
  3,364
  3,617
  3,881
  4,155
  4,439
  4,565
  4,872
  5,192
  5,524
  5,869
  6,228
  6,602
  6,991
  7,396
  7,819
  8,259
  8,719
  9,198
  9,699
  10,223
  10,769
  11,341
  11,939
  12,565
  13,220
Maintenance CAPEX, $m
  0
  -508
  -572
  -638
  -708
  -782
  -859
  -940
  -1,024
  -1,111
  -1,202
  -1,297
  -1,395
  -1,497
  -1,603
  -1,713
  -1,828
  -1,947
  -2,071
  -2,201
  -2,335
  -2,475
  -2,621
  -2,773
  -2,932
  -3,098
  -3,271
  -3,452
  -3,641
  -3,839
  -4,046
New CAPEX, $m
  -46
  -1,895
  -2,000
  -2,105
  -2,209
  -2,312
  -2,415
  -2,518
  -2,622
  -2,728
  -2,837
  -2,948
  -3,064
  -3,184
  -3,309
  -3,440
  -3,578
  -3,722
  -3,874
  -4,034
  -4,203
  -4,381
  -4,568
  -4,766
  -4,975
  -5,196
  -5,428
  -5,674
  -5,932
  -6,205
  -6,492
Cash from investing activities, $m
  36
  -2,403
  -2,572
  -2,743
  -2,917
  -3,094
  -3,274
  -3,458
  -3,646
  -3,839
  -4,039
  -4,245
  -4,459
  -4,681
  -4,912
  -5,153
  -5,406
  -5,669
  -5,945
  -6,235
  -6,538
  -6,856
  -7,189
  -7,539
  -7,907
  -8,294
  -8,699
  -9,126
  -9,573
  -10,044
  -10,538
Free cash flow, $m
  1,751
  -157
  -121
  -79
  -30
  26
  90
  159
  235
  315
  401
  320
  413
  511
  611
  715
  822
  932
  1,045
  1,162
  1,281
  1,403
  1,529
  1,659
  1,792
  1,929
  2,070
  2,216
  2,366
  2,521
  2,682
Issuance/(repayment) of debt, $m
  -94
  2,314
  2,480
  2,611
  2,740
  2,868
  2,996
  3,123
  3,253
  3,384
  3,519
  3,657
  3,800
  3,949
  4,105
  4,267
  4,438
  4,617
  4,805
  5,004
  5,213
  5,434
  5,666
  5,912
  6,171
  6,445
  6,733
  7,037
  7,358
  7,696
  8,052
Issuance/(repurchase) of shares, $m
  19
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -71
  2,314
  2,480
  2,611
  2,740
  2,868
  2,996
  3,123
  3,253
  3,384
  3,519
  3,657
  3,800
  3,949
  4,105
  4,267
  4,438
  4,617
  4,805
  5,004
  5,213
  5,434
  5,666
  5,912
  6,171
  6,445
  6,733
  7,037
  7,358
  7,696
  8,052
Total cash flow (excl. dividends), $m
  1,676
  2,157
  2,360
  2,532
  2,710
  2,894
  3,085
  3,283
  3,487
  3,700
  3,919
  3,977
  4,214
  4,460
  4,716
  4,982
  5,260
  5,549
  5,850
  6,165
  6,494
  6,837
  7,196
  7,571
  7,963
  8,373
  8,803
  9,253
  9,724
  10,217
  10,734
Retained Cash Flow (-), $m
  -495
  -610
  -643
  -677
  -711
  -744
  -777
  -810
  -844
  -878
  -913
  -949
  -986
  -1,025
  -1,065
  -1,107
  -1,151
  -1,198
  -1,247
  -1,298
  -1,352
  -1,410
  -1,470
  -1,534
  -1,601
  -1,672
  -1,747
  -1,826
  -1,909
  -1,997
  -2,089
Prev. year cash balance distribution, $m
 
  1,846
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,393
  1,716
  1,854
  1,999
  2,150
  2,308
  2,473
  2,644
  2,822
  3,006
  3,028
  3,228
  3,435
  3,651
  3,875
  4,108
  4,351
  4,604
  4,867
  5,141
  5,427
  5,725
  6,037
  6,362
  6,701
  7,056
  7,427
  7,815
  8,221
  8,645
Discount rate, %
 
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
 
  3,128
  1,446
  1,417
  1,373
  1,315
  1,244
  1,162
  1,071
  973
  871
  727
  633
  542
  456
  376
  304
  241
  187
  142
  105
  76
  53
  37
  24
  16
  10
  6
  3
  2
  1
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Restaurant Brands International Inc. is a quick service restaurant (QSR) company. The Company had over 20,000 restaurants in more than 100 countries and the United States territories, as of December 31, 2016. It operates through two segments: Tim Hortons (TH) and Burger King (BK). Tim Hortons restaurants are quick service restaurants with a menu that includes blend coffee, tea, espresso-based hot and cold specialty drinks, baked goods, including donuts, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps and soups, among others. Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken and other specialty sandwiches, French fries, soft drinks and other food items. The Company operates coffee roasting facilities in Hamilton, Ontario and Rochester, New York. The Company sells its raw materials and supplies, including coffee, sugar, paper goods and other restaurant supplies to Tim Hortons restaurants.

FINANCIAL RATIOS  of  Restaurant Brands International Inc. (QSR)

Valuation Ratios
P/E Ratio 22.1
Price to Sales 3.3
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 10.7
Price to Free Cash Flow 11
Growth Rates
Sales Growth Rate 2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -70.5%
Cap. Spend. - 3 Yr. Gr. Rate 6.2%
Financial Strength
Quick Ratio 16
Current Ratio 0
LT Debt to Equity 172.6%
Total Debt to Equity 174.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 4.5%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity 12.8%
Return On Equity - 3 Yr. Avg. 8.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 58.3%
Gross Margin - 3 Yr. Avg. 66.9%
EBITDA Margin 42.9%
EBITDA Margin - 3 Yr. Avg. 25.1%
Operating Margin 40.2%
Oper. Margin - 3 Yr. Avg. 23.6%
Pre-Tax Margin 28.9%
Pre-Tax Margin - 3 Yr. Avg. 8.1%
Net Profit Margin 14.9%
Net Profit Margin - 3 Yr. Avg. 12.5%
Effective Tax Rate 20.4%
Eff/ Tax Rate - 3 Yr. Avg. 12.8%
Payout Ratio 87.4%

QSR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QSR stock intrinsic value calculation we used $5601 million for the last fiscal year's total revenue generated by Restaurant Brands International Inc.. The default revenue input number comes from 2016 income statement of Restaurant Brands International Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our QSR stock valuation model: a) initial revenue growth rate of 12.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.5%, whose default value for QSR is calculated based on our internal credit rating of Restaurant Brands International Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Restaurant Brands International Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of QSR stock the variable cost ratio is equal to 71.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for QSR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.7% for Restaurant Brands International Inc..

Corporate tax rate of 27% is the nominal tax rate for Restaurant Brands International Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the QSR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for QSR are equal to 272.4%.

Life of production assets of 92.3 years is the average useful life of capital assets used in Restaurant Brands International Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for QSR is equal to -11.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6755 million for Restaurant Brands International Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 464.043 million for Restaurant Brands International Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Restaurant Brands International Inc. at the current share price and the inputted number of shares is $36.4 billion.

RELATED COMPANIES Price Int.Val. Rating
Financial statements of QSR
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The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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