Intrinsic value of Restaurant Brands International Inc. - QSR

Previous Close

$85.07

  Intrinsic Value

$34.26

stock screener

  Rating & Target

str. sell

-60%

Previous close

$85.07

 
Intrinsic value

$34.26

 
Up/down potential

-60%

 
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 39.4

 

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
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.87
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.59
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
Revenue, $m
  5,601
  6,099
  6,619
  7,159
  7,720
  8,304
  8,910
  9,540
  10,195
  10,876
  11,584
  12,321
  13,088
  13,886
  14,718
  15,585
  16,490
  17,434
  18,419
  19,447
  20,522
  21,646
  22,820
  24,049
  25,334
  26,680
  28,089
  29,564
  31,109
  32,728
  34,425
Variable operating expenses, $m
 
  4,311
  4,624
  4,950
  5,289
  5,641
  6,006
  6,387
  6,782
  7,192
  7,620
  7,432
  7,895
  8,377
  8,879
  9,402
  9,947
  10,516
  11,111
  11,731
  12,380
  13,057
  13,766
  14,507
  15,283
  16,094
  16,944
  17,834
  18,766
  19,743
  20,766
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
  4,311
  4,624
  4,950
  5,289
  5,641
  6,006
  6,387
  6,782
  7,192
  7,620
  7,432
  7,895
  8,377
  8,879
  9,402
  9,947
  10,516
  11,111
  11,731
  12,380
  13,057
  13,766
  14,507
  15,283
  16,094
  16,944
  17,834
  18,766
  19,743
  20,766
Operating income, $m
  2,252
  1,788
  1,994
  2,209
  2,431
  2,663
  2,904
  3,154
  3,413
  3,684
  3,965
  4,888
  5,193
  5,510
  5,840
  6,184
  6,543
  6,917
  7,308
  7,716
  8,142
  8,588
  9,054
  9,542
  10,052
  10,586
  11,145
  11,730
  12,343
  12,985
  13,658
EBITDA, $m
  2,485
  2,974
  3,227
  3,490
  3,764
  4,049
  4,344
  4,651
  4,971
  5,303
  5,648
  6,007
  6,381
  6,770
  7,176
  7,599
  8,040
  8,500
  8,980
  9,482
  10,006
  10,554
  11,126
  11,725
  12,352
  13,008
  13,695
  14,414
  15,168
  15,957
  16,784
Interest expense (income), $m
  550
  548
  626
  708
  794
  883
  976
  1,072
  1,172
  1,276
  1,384
  1,497
  1,614
  1,735
  1,862
  1,994
  2,132
  2,276
  2,425
  2,582
  2,745
  2,916
  3,094
  3,281
  3,476
  3,680
  3,894
  4,117
  4,352
  4,597
  4,854
Earnings before tax, $m
  1,621
  1,241
  1,369
  1,501
  1,638
  1,780
  1,928
  2,082
  2,242
  2,408
  2,581
  3,392
  3,579
  3,774
  3,978
  4,190
  4,411
  4,641
  4,882
  5,134
  5,397
  5,672
  5,960
  6,261
  6,576
  6,906
  7,251
  7,613
  7,991
  8,388
  8,804
Tax expense, $m
  330
  335
  370
  405
  442
  481
  521
  562
  605
  650
  697
  916
  966
  1,019
  1,074
  1,131
  1,191
  1,253
  1,318
  1,386
  1,457
  1,532
  1,609
  1,690
  1,775
  1,865
  1,958
  2,055
  2,158
  2,265
  2,377
Net income, $m
  832
  906
  999
  1,096
  1,196
  1,299
  1,407
  1,520
  1,636
  1,758
  1,884
  2,476
  2,613
  2,755
  2,904
  3,058
  3,220
  3,388
  3,564
  3,748
  3,940
  4,141
  4,351
  4,571
  4,800
  5,041
  5,293
  5,557
  5,834
  6,123
  6,427

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
  25,955
  28,164
  30,462
  32,851
  35,334
  37,915
  40,596
  43,383
  46,281
  49,294
  52,429
  55,692
  59,090
  62,631
  66,321
  70,170
  74,185
  78,377
  82,755
  87,328
  92,109
  97,107
  102,336
  107,806
  113,532
  119,526
  125,804
  132,379
  139,268
  146,488
Adjusted assets (=assets-cash), $m
  23,866
  25,955
  28,164
  30,462
  32,851
  35,334
  37,915
  40,596
  43,383
  46,281
  49,294
  52,429
  55,692
  59,090
  62,631
  66,321
  70,170
  74,185
  78,377
  82,755
  87,328
  92,109
  97,107
  102,336
  107,806
  113,532
  119,526
  125,804
  132,379
  139,268
  146,488
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
  16,615
  18,029
  19,500
  21,029
  22,619
  24,271
  25,987
  27,771
  29,626
  31,555
  33,562
  35,651
  37,826
  40,092
  42,455
  44,918
  47,489
  50,172
  52,975
  55,902
  58,963
  62,162
  65,509
  69,011
  72,676
  76,514
  80,532
  84,741
  89,151
  93,773
Working capital, $m
  1,197
  -708
  -768
  -830
  -896
  -963
  -1,034
  -1,107
  -1,183
  -1,262
  -1,344
  -1,429
  -1,518
  -1,611
  -1,707
  -1,808
  -1,913
  -2,022
  -2,137
  -2,256
  -2,381
  -2,511
  -2,647
  -2,790
  -2,939
  -3,095
  -3,258
  -3,429
  -3,609
  -3,796
  -3,993
Total debt, $m
  11,785
  13,309
  15,063
  16,888
  18,785
  20,756
  22,805
  24,934
  27,147
  29,448
  31,841
  34,330
  36,921
  39,619
  42,430
  45,360
  48,416
  51,604
  54,932
  58,408
  62,040
  65,835
  69,804
  73,955
  78,299
  82,845
  87,605
  92,589
  97,810
  103,280
  109,012
Total liabilities, $m
  19,085
  20,608
  22,362
  24,187
  26,084
  28,055
  30,104
  32,233
  34,446
  36,747
  39,140
  41,629
  44,220
  46,918
  49,729
  52,659
  55,715
  58,903
  62,231
  65,707
  69,339
  73,134
  77,103
  81,254
  85,598
  90,144
  94,904
  99,888
  105,109
  110,579
  116,311
Total equity, $m
  6,755
  5,347
  5,802
  6,275
  6,767
  7,279
  7,810
  8,363
  8,937
  9,534
  10,155
  10,800
  11,473
  12,173
  12,902
  13,662
  14,455
  15,282
  16,146
  17,047
  17,990
  18,974
  20,004
  21,081
  22,208
  23,388
  24,622
  25,916
  27,270
  28,689
  30,176
Total liabilities and equity, $m
  25,840
  25,955
  28,164
  30,462
  32,851
  35,334
  37,914
  40,596
  43,383
  46,281
  49,295
  52,429
  55,693
  59,091
  62,631
  66,321
  70,170
  74,185
  78,377
  82,754
  87,329
  92,108
  97,107
  102,335
  107,806
  113,532
  119,526
  125,804
  132,379
  139,268
  146,487
Debt-to-equity ratio
  1.745
  2.490
  2.600
  2.690
  2.780
  2.850
  2.920
  2.980
  3.040
  3.090
  3.140
  3.180
  3.220
  3.250
  3.290
  3.320
  3.350
  3.380
  3.400
  3.430
  3.450
  3.470
  3.490
  3.510
  3.530
  3.540
  3.560
  3.570
  3.590
  3.600
  3.610
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
  906
  999
  1,096
  1,196
  1,299
  1,407
  1,520
  1,636
  1,758
  1,884
  2,476
  2,613
  2,755
  2,904
  3,058
  3,220
  3,388
  3,564
  3,748
  3,940
  4,141
  4,351
  4,571
  4,800
  5,041
  5,293
  5,557
  5,834
  6,123
  6,427
Depreciation, amort., depletion, $m
  233
  1,185
  1,233
  1,282
  1,333
  1,386
  1,441
  1,498
  1,557
  1,619
  1,683
  1,119
  1,188
  1,261
  1,336
  1,415
  1,497
  1,583
  1,672
  1,766
  1,863
  1,965
  2,072
  2,184
  2,300
  2,423
  2,550
  2,684
  2,825
  2,972
  3,126
Funds from operations, $m
  1,718
  2,091
  2,232
  2,377
  2,528
  2,685
  2,848
  3,018
  3,194
  3,377
  3,567
  3,595
  3,801
  4,016
  4,240
  4,474
  4,717
  4,971
  5,237
  5,514
  5,803
  6,106
  6,423
  6,754
  7,101
  7,464
  7,844
  8,242
  8,658
  9,095
  9,553
Change in working capital, $m
  3
  -58
  -60
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -109
  -114
  -119
  -125
  -130
  -136
  -143
  -149
  -156
  -163
  -171
  -179
  -188
  -197
Cash from operations, $m
  1,715
  2,149
  2,292
  2,440
  2,593
  2,753
  2,918
  3,091
  3,270
  3,456
  3,649
  3,680
  3,890
  4,109
  4,337
  4,574
  4,822
  5,081
  5,351
  5,633
  5,928
  6,237
  6,559
  6,897
  7,250
  7,620
  8,007
  8,413
  8,838
  9,283
  9,750
Maintenance CAPEX, $m
  0
  -508
  -554
  -601
  -650
  -701
  -754
  -809
  -866
  -926
  -988
  -1,052
  -1,119
  -1,188
  -1,261
  -1,336
  -1,415
  -1,497
  -1,583
  -1,672
  -1,766
  -1,863
  -1,965
  -2,072
  -2,184
  -2,300
  -2,423
  -2,550
  -2,684
  -2,825
  -2,972
New CAPEX, $m
  -46
  -1,361
  -1,414
  -1,471
  -1,529
  -1,590
  -1,652
  -1,717
  -1,784
  -1,855
  -1,929
  -2,007
  -2,089
  -2,175
  -2,266
  -2,362
  -2,464
  -2,571
  -2,683
  -2,802
  -2,928
  -3,060
  -3,200
  -3,347
  -3,502
  -3,665
  -3,837
  -4,018
  -4,209
  -4,410
  -4,621
Cash from investing activities, $m
  36
  -1,869
  -1,968
  -2,072
  -2,179
  -2,291
  -2,406
  -2,526
  -2,650
  -2,781
  -2,917
  -3,059
  -3,208
  -3,363
  -3,527
  -3,698
  -3,879
  -4,068
  -4,266
  -4,474
  -4,694
  -4,923
  -5,165
  -5,419
  -5,686
  -5,965
  -6,260
  -6,568
  -6,893
  -7,235
  -7,593
Free cash flow, $m
  1,751
  280
  324
  368
  414
  462
  513
  565
  619
  675
  733
  622
  683
  745
  809
  875
  943
  1,013
  1,085
  1,158
  1,234
  1,313
  1,394
  1,478
  1,564
  1,654
  1,747
  1,844
  1,944
  2,048
  2,157
Issuance/(repayment) of debt, $m
  -94
  1,651
  1,754
  1,825
  1,897
  1,972
  2,049
  2,129
  2,213
  2,301
  2,393
  2,489
  2,591
  2,698
  2,811
  2,930
  3,056
  3,188
  3,328
  3,476
  3,632
  3,796
  3,969
  4,151
  4,344
  4,546
  4,760
  4,984
  5,221
  5,470
  5,732
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
  1,651
  1,754
  1,825
  1,897
  1,972
  2,049
  2,129
  2,213
  2,301
  2,393
  2,489
  2,591
  2,698
  2,811
  2,930
  3,056
  3,188
  3,328
  3,476
  3,632
  3,796
  3,969
  4,151
  4,344
  4,546
  4,760
  4,984
  5,221
  5,470
  5,732
Total cash flow (excl. dividends), $m
  1,676
  1,931
  2,078
  2,192
  2,311
  2,434
  2,561
  2,694
  2,832
  2,976
  3,125
  3,111
  3,273
  3,443
  3,620
  3,806
  3,999
  4,201
  4,413
  4,634
  4,866
  5,109
  5,363
  5,629
  5,908
  6,200
  6,507
  6,828
  7,165
  7,518
  7,889
Retained Cash Flow (-), $m
  -495
  -438
  -455
  -473
  -492
  -512
  -532
  -552
  -574
  -597
  -621
  -646
  -672
  -700
  -729
  -760
  -793
  -827
  -864
  -902
  -942
  -985
  -1,030
  -1,077
  -1,127
  -1,179
  -1,235
  -1,293
  -1,355
  -1,419
  -1,487
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
 
  3,340
  1,623
  1,719
  1,819
  1,922
  2,030
  2,142
  2,258
  2,379
  2,505
  2,465
  2,601
  2,743
  2,891
  3,045
  3,206
  3,374
  3,549
  3,732
  3,924
  4,124
  4,333
  4,552
  4,781
  5,021
  5,272
  5,535
  5,810
  6,099
  6,402
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
 
  3,078
  1,368
  1,314
  1,249
  1,176
  1,094
  1,007
  915
  820
  726
  592
  510
  433
  361
  295
  237
  187
  144
  109
  80
  58
  40
  28
  18
  12
  7
  4
  3
  1
  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 24
Price to Sales 3.6
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 11.6
Price to Free Cash Flow 11.9
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 8.9% 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 463.176 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 $39.4 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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