Insider Monkey calls Restaurant Brands International (QSR) a better buy than Yum! Brands (YUM), citing forward P/E ratios near 12 versus 20 and dividend yields of about 3.6% versus 2.2%. It warns the price assumes a sharp recovery, which Burger King cannot deliver alone.
Yum completed the sale of Pizza Hut, leaving KFC, Taco Bell and the much smaller Habit Burger; it is about 98% franchised across more than 44,000 restaurants. Argus downgraded Yum to Hold on Sept. 24, citing soft KFC comparable sales and commodity and fuel costs. The article also says a summer Cyclospora outbreak traced to supplier lettuce hit Taco Bell.
The article says Burger King passed Wendy’s to become the U.S.’s second-largest burger chain, helped by a reworked Whopper and investment in restaurants. Restaurant Brands management is moving toward a nearly fully franchised model, but the analysis warns that a stalling Tim Hortons could cancel out Burger King’s recovery. It identifies Burger King comparable sales in the company’s Oct. 29 report as a key metric to watch.
