Restaurant Brands International Inc. (NYSE:QSR) saw a decent share price growth of 17% on the NYSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, could the stock still be trading at a relatively cheap price? Let's examine Restaurant Brands International's valuation and outlook in more detail to determine if there's still a bargain opportunity.
What Is Restaurant Brands International Worth?
Restaurant Brands International appears to be overvalued by 23% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$77.42 on the market compared to our intrinsic value of $63.15. This means that the buying opportunity has probably disappeared for now. Furthermore, Restaurant Brands International's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Restaurant Brands International?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Restaurant Brands International's earnings over the next few years are expected to increase by 92%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? QSR's optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe QSR should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on QSR for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there's no upside from mispricing. However, the positive outlook is encouraging for QSR, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Restaurant Brands International as a business, it's important to be aware of any risks it's facing. Our analysis shows 3 warning signs for Restaurant Brands International (1 is a bit unpleasant!) and we strongly recommend you look at them before investing.
If you are no longer interested in Restaurant Brands International, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.