QSR is in stage #2. This could become another Texas Roadhouse restaurant if done correctly. Patrick Doyle is a great CEO and has a very good track record of turning struggling businesses around and making them profitable. I think this could be another opportunity to make this a great investment although the stock is overvalued when compared to the company’s underlying adjusted operating earnings. The weekly chart indicates that the stock moved nowhere since 2017. If my expectations for Patrick Doyle will be correct, this may change.

 

 

The company pays dividends, and the current dividend yield is 3.14% (dividend payout per share is 2.20). The company increases its dividends every year by a decent 4.1% (5-year average annual growth), or 1.85% annually. Nothing extraordinary but given the nature of this company, I think it is acceptable.

 

 

The business’s revenue is steadily growing at 9.25% annually. That is good news for this company. I consider these positive metrics. We only saw a decline in earnings in 2020:

 

 

Unfortunately, the free cash flow is erratic. A one-year average is -13.79%, 2-year growth is +18.51%, and 5-year average is again -7.33%. A bit of a zig-zag performance:

 

 

QSR’s debt is large and growing. The company doesn’t have enough cash to cover the debt. That is very negative.

 

 

Given the valuation of the company and its financial situation, I think it is not a complete disaster. There are worse investments out there. Nevertheless, this still makes this investment a speculative one. When investing in QSR, invest small amounts of money. I also recommend utilizing options to lower the cost basis and generate income.

Fundamentally, the stock is overvalued, trading ways above its estimated fair value of $52.03 per share:

 

 

 

The stock is now MODERATE BUY
 

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