Intrinsic value of Restaurant Brands International Inc. - QSR

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$76.44

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$76.44

 
Intrinsic value

$59.14

 
Up/down potential

-23%

 
Rating

sell

 
Value-price divergence* premium content

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*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 18.1

 

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
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
Revenue, $m
  5,601
  5,892
  6,197
  6,517
  6,853
  7,204
  7,573
  7,960
  8,365
  8,791
  9,237
  9,706
  10,197
  10,713
  11,254
  11,821
  12,417
  13,043
  13,699
  14,388
  15,112
  15,871
  16,668
  17,505
  18,383
  19,305
  20,273
  21,289
  22,356
  23,477
  24,653
Variable operating expenses, $m
 
  4,186
  4,370
  4,563
  4,765
  4,978
  5,200
  5,433
  5,678
  5,935
  6,204
  5,855
  6,151
  6,462
  6,789
  7,131
  7,491
  7,868
  8,264
  8,680
  9,116
  9,574
  10,055
  10,559
  11,089
  11,646
  12,229
  12,843
  13,486
  14,162
  14,871
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
  4,186
  4,370
  4,563
  4,765
  4,978
  5,200
  5,433
  5,678
  5,935
  6,204
  5,855
  6,151
  6,462
  6,789
  7,131
  7,491
  7,868
  8,264
  8,680
  9,116
  9,574
  10,055
  10,559
  11,089
  11,646
  12,229
  12,843
  13,486
  14,162
  14,871
Operating income, $m
  2,252
  1,706
  1,827
  1,954
  2,087
  2,227
  2,373
  2,527
  2,688
  2,856
  3,033
  3,851
  4,046
  4,250
  4,465
  4,690
  4,927
  5,175
  5,435
  5,709
  5,996
  6,297
  6,613
  6,945
  7,294
  7,660
  8,044
  8,447
  8,870
  9,315
  9,781
EBITDA, $m
  2,485
  2,873
  3,022
  3,178
  3,341
  3,513
  3,692
  3,881
  4,079
  4,286
  4,504
  4,732
  4,972
  5,223
  5,487
  5,764
  6,054
  6,359
  6,679
  7,015
  7,368
  7,738
  8,127
  8,535
  8,963
  9,413
  9,884
  10,380
  10,900
  11,446
  12,020
Interest expense (income), $m
  550
  548
  593
  641
  692
  745
  801
  860
  921
  985
  1,053
  1,124
  1,198
  1,276
  1,358
  1,444
  1,534
  1,629
  1,728
  1,832
  1,942
  2,057
  2,177
  2,304
  2,437
  2,576
  2,723
  2,876
  3,038
  3,207
  3,385
Earnings before tax, $m
  1,621
  1,158
  1,235
  1,313
  1,395
  1,482
  1,572
  1,667
  1,767
  1,871
  1,980
  2,727
  2,848
  2,974
  3,107
  3,246
  3,393
  3,546
  3,707
  3,876
  4,054
  4,240
  4,436
  4,641
  4,857
  5,083
  5,321
  5,571
  5,833
  6,108
  6,396
Tax expense, $m
  330
  313
  333
  355
  377
  400
  424
  450
  477
  505
  535
  736
  769
  803
  839
  877
  916
  957
  1,001
  1,047
  1,095
  1,145
  1,198
  1,253
  1,311
  1,373
  1,437
  1,504
  1,575
  1,649
  1,727
Net income, $m
  832
  846
  901
  959
  1,019
  1,082
  1,148
  1,217
  1,290
  1,366
  1,446
  1,991
  2,079
  2,171
  2,268
  2,370
  2,477
  2,589
  2,706
  2,830
  2,959
  3,095
  3,238
  3,388
  3,546
  3,711
  3,884
  4,067
  4,258
  4,459
  4,669

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
  25,073
  26,372
  27,734
  29,161
  30,657
  32,226
  33,872
  35,598
  37,408
  39,307
  41,300
  43,391
  45,585
  47,888
  50,304
  52,840
  55,501
  58,295
  61,227
  64,305
  67,536
  70,928
  74,488
  78,226
  82,149
  86,269
  90,593
  95,133
  99,900
  104,905
Adjusted assets (=assets-cash), $m
  23,866
  25,073
  26,372
  27,734
  29,161
  30,657
  32,226
  33,872
  35,598
  37,408
  39,307
  41,300
  43,391
  45,585
  47,888
  50,304
  52,840
  55,501
  58,295
  61,227
  64,305
  67,536
  70,928
  74,488
  78,226
  82,149
  86,269
  90,593
  95,133
  99,900
  104,905
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
  16,050
  16,882
  17,753
  18,667
  19,625
  20,629
  21,683
  22,787
  23,946
  25,162
  26,438
  27,776
  29,181
  30,655
  32,202
  33,825
  35,529
  37,317
  39,194
  41,164
  43,233
  45,404
  47,683
  50,075
  52,587
  55,224
  57,992
  60,899
  63,950
  67,154
Working capital, $m
  1,197
  -684
  -719
  -756
  -795
  -836
  -878
  -923
  -970
  -1,020
  -1,072
  -1,126
  -1,183
  -1,243
  -1,305
  -1,371
  -1,440
  -1,513
  -1,589
  -1,669
  -1,753
  -1,841
  -1,933
  -2,031
  -2,132
  -2,239
  -2,352
  -2,470
  -2,593
  -2,723
  -2,860
Total debt, $m
  11,785
  12,609
  13,641
  14,721
  15,855
  17,043
  18,288
  19,595
  20,965
  22,403
  23,911
  25,493
  27,154
  28,896
  30,724
  32,642
  34,656
  36,769
  38,987
  41,315
  43,759
  46,325
  49,018
  51,845
  54,812
  57,928
  61,198
  64,632
  68,237
  72,022
  75,995
Total liabilities, $m
  19,085
  19,908
  20,940
  22,020
  23,154
  24,342
  25,587
  26,894
  28,264
  29,702
  31,210
  32,792
  34,453
  36,195
  38,023
  39,941
  41,955
  44,068
  46,286
  48,614
  51,058
  53,624
  56,317
  59,144
  62,111
  65,227
  68,497
  71,931
  75,536
  79,321
  83,294
Total equity, $m
  6,755
  5,165
  5,433
  5,713
  6,007
  6,315
  6,639
  6,978
  7,333
  7,706
  8,097
  8,508
  8,939
  9,391
  9,865
  10,363
  10,885
  11,433
  12,009
  12,613
  13,247
  13,912
  14,611
  15,345
  16,114
  16,923
  17,771
  18,662
  19,597
  20,579
  21,610
Total liabilities and equity, $m
  25,840
  25,073
  26,373
  27,733
  29,161
  30,657
  32,226
  33,872
  35,597
  37,408
  39,307
  41,300
  43,392
  45,586
  47,888
  50,304
  52,840
  55,501
  58,295
  61,227
  64,305
  67,536
  70,928
  74,489
  78,225
  82,150
  86,268
  90,593
  95,133
  99,900
  104,904
Debt-to-equity ratio
  1.745
  2.440
  2.510
  2.580
  2.640
  2.700
  2.750
  2.810
  2.860
  2.910
  2.950
  3.000
  3.040
  3.080
  3.110
  3.150
  3.180
  3.220
  3.250
  3.280
  3.300
  3.330
  3.350
  3.380
  3.400
  3.420
  3.440
  3.460
  3.480
  3.500
  3.520
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
  846
  901
  959
  1,019
  1,082
  1,148
  1,217
  1,290
  1,366
  1,446
  1,991
  2,079
  2,171
  2,268
  2,370
  2,477
  2,589
  2,706
  2,830
  2,959
  3,095
  3,238
  3,388
  3,546
  3,711
  3,884
  4,067
  4,258
  4,459
  4,669
Depreciation, amort., depletion, $m
  233
  1,167
  1,194
  1,223
  1,254
  1,286
  1,319
  1,354
  1,391
  1,430
  1,470
  881
  926
  973
  1,022
  1,073
  1,127
  1,184
  1,244
  1,306
  1,372
  1,441
  1,513
  1,589
  1,669
  1,753
  1,841
  1,933
  2,030
  2,132
  2,238
Funds from operations, $m
  1,718
  2,012
  2,096
  2,182
  2,272
  2,367
  2,467
  2,571
  2,681
  2,796
  2,916
  2,872
  3,005
  3,144
  3,290
  3,443
  3,604
  3,773
  3,950
  4,136
  4,332
  4,537
  4,752
  4,978
  5,215
  5,464
  5,725
  6,000
  6,288
  6,590
  6,908
Change in working capital, $m
  3
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -130
  -136
Cash from operations, $m
  1,715
  2,035
  2,131
  2,219
  2,311
  2,408
  2,510
  2,616
  2,728
  2,845
  2,968
  2,926
  3,062
  3,204
  3,353
  3,509
  3,673
  3,846
  4,026
  4,216
  4,415
  4,625
  4,844
  5,075
  5,317
  5,571
  5,837
  6,117
  6,411
  6,720
  7,044
Maintenance CAPEX, $m
  0
  -508
  -535
  -563
  -592
  -622
  -654
  -688
  -723
  -760
  -798
  -839
  -881
  -926
  -973
  -1,022
  -1,073
  -1,127
  -1,184
  -1,244
  -1,306
  -1,372
  -1,441
  -1,513
  -1,589
  -1,669
  -1,753
  -1,841
  -1,933
  -2,030
  -2,132
New CAPEX, $m
  -46
  -796
  -831
  -871
  -914
  -958
  -1,004
  -1,053
  -1,105
  -1,159
  -1,216
  -1,276
  -1,338
  -1,405
  -1,474
  -1,547
  -1,623
  -1,704
  -1,788
  -1,877
  -1,970
  -2,068
  -2,171
  -2,279
  -2,393
  -2,512
  -2,637
  -2,768
  -2,906
  -3,051
  -3,204
Cash from investing activities, $m
  36
  -1,304
  -1,366
  -1,434
  -1,506
  -1,580
  -1,658
  -1,741
  -1,828
  -1,919
  -2,014
  -2,115
  -2,219
  -2,331
  -2,447
  -2,569
  -2,696
  -2,831
  -2,972
  -3,121
  -3,276
  -3,440
  -3,612
  -3,792
  -3,982
  -4,181
  -4,390
  -4,609
  -4,839
  -5,081
  -5,336
Free cash flow, $m
  1,751
  731
  765
  785
  806
  828
  851
  875
  900
  926
  954
  812
  842
  873
  906
  940
  976
  1,014
  1,054
  1,095
  1,139
  1,184
  1,232
  1,282
  1,335
  1,390
  1,448
  1,508
  1,572
  1,639
  1,709
Issuance/(repayment) of debt, $m
  -94
  951
  1,031
  1,081
  1,133
  1,188
  1,246
  1,307
  1,370
  1,438
  1,508
  1,582
  1,660
  1,742
  1,828
  1,919
  2,014
  2,113
  2,218
  2,328
  2,444
  2,565
  2,693
  2,827
  2,968
  3,115
  3,271
  3,434
  3,605
  3,785
  3,974
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
  951
  1,031
  1,081
  1,133
  1,188
  1,246
  1,307
  1,370
  1,438
  1,508
  1,582
  1,660
  1,742
  1,828
  1,919
  2,014
  2,113
  2,218
  2,328
  2,444
  2,565
  2,693
  2,827
  2,968
  3,115
  3,271
  3,434
  3,605
  3,785
  3,974
Total cash flow (excl. dividends), $m
  1,676
  1,682
  1,796
  1,866
  1,939
  2,016
  2,097
  2,182
  2,271
  2,364
  2,462
  2,394
  2,502
  2,615
  2,734
  2,859
  2,990
  3,128
  3,272
  3,423
  3,583
  3,750
  3,925
  4,109
  4,302
  4,505
  4,718
  4,942
  5,177
  5,424
  5,682
Retained Cash Flow (-), $m
  -495
  -256
  -268
  -280
  -294
  -308
  -323
  -339
  -356
  -373
  -391
  -411
  -431
  -452
  -474
  -498
  -522
  -548
  -575
  -604
  -634
  -666
  -699
  -733
  -770
  -808
  -849
  -891
  -935
  -982
  -1,031
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
 
  3,272
  1,528
  1,585
  1,645
  1,708
  1,774
  1,843
  1,915
  1,991
  2,071
  1,984
  2,071
  2,163
  2,260
  2,361
  2,468
  2,579
  2,696
  2,819
  2,949
  3,084
  3,226
  3,376
  3,532
  3,697
  3,870
  4,051
  4,242
  4,442
  4,652
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
 
  3,016
  1,288
  1,212
  1,130
  1,045
  956
  866
  776
  687
  600
  476
  406
  341
  282
  229
  183
  143
  109
  82
  60
  43
  30
  20
  13
  9
  5
  3
  2
  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. owns and operates quick service restaurants under the Burger King and Tim Hortons brand names. As of February 16, 2016, it franchised or owned approximately 19,000 restaurants in approximately 100 countries and U.S. territories worldwide. The company was founded in 1954 and is headquartered in Oakville, Canada.

FINANCIAL RATIOS  of  Restaurant Brands International Inc. (QSR)

Valuation Ratios
P/E Ratio 21.5
Price to Sales 3.2
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 10.4
Price to Free Cash Flow 10.7
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 5.2% 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 237.011 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 $18.1 billion.


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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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