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Restaurant Brands International Inc

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Restaurant Brands International Inc AI Insights

Informational only. Not investment advice.
As of 2025-12-16

Snapshot

  • Debt/equity of 4.7x with 15.9B total debt vs 3.4B equity; tangible book value is -14B due to 17.4B intangibles (68% of assets)[Debt to Equity]
  • Operating margin TTM 25.9% vs industry median 5.1% - 5x advantage from asset-light franchise model generating 2.4B operating income[Operating Margin TTM]
  • FCF TTM 1.4B (15% of revenue) covers 1.1B dividends at 75% payout ratio; capex only 240M reflects franchise structure[Free Cash Flow TTM]

Watch Triggers

  • Interest Expense TTM: Exceeds 600M or interest coverage falls below 4xAlready consuming 58% of net income; further pressure threatens dividend sustainability
  • Free Cash Flow TTM: Falls below 1.2B (current dividend requirement)75% payout ratio leaves minimal buffer; FCF decline forces dividend cut or more debt
  • Goodwill and Other Intangible Assets: Any impairment charge announced17.4B intangibles vs 3.4B equity means even 20% write-down wipes out equity

Bull Case

Asset-light franchise model delivers 25.9% operating margin (5x industry) with minimal capex (2.6% of revenue), enabling 1.4B FCF despite 9.3B revenue

Operating Margin TTMFree Cash Flow TTMCapital Expenditure TTM

ROE of 27.9% (3.6x industry median 7.7%) demonstrates efficient capital deployment despite leveraged structure

ROE TTMNet Income TTM

Bear Case

Negative tangible book value (-14B) with goodwill/intangibles at 17.4B (5x equity) creates material impairment risk if brand values deteriorate

Tangible Book ValueGoodwill and Other Intangible AssetsTotal Equity

4.7x debt/equity with 534M annual interest (58% of net income) limits flexibility; rising rates would compress already thin 10% net margin

Debt to EquityInterest Expense TTMNet Margin TTM

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
45%

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Forward Thesis

Interest coverage pressure likely to constrain capital allocation flexibility over next 1-3 years

1-3ymed
  • 534M interest expense TTM consumes 58% of net income
  • EBITDA/interest of 4.7x leaves limited buffer
  • Net debt of 12.3B vs 1.4B FCF = 8.8 years to delever
Interest expense 534M TTMNet income 922M TTMTotal debt 15.9B vs equity 3.4B

Valuation Context

Caveats

Public Strategies Rankings

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