Episode Details

Restaurant Brands International (QSR) Q2 2026 — Q2 2026 (3 months ended June 30, 2026): system-wide sales $12.702B, up 6.4% in constant currency; comparable sales +3.8%; net restaurant growth +2.9% to 33,156 restaurants. Total revenue $2.520B vs a $2.5445B bar (a MISS). Adjusted diluted EPS $1.07 vs a $1.04 bar (a 3-cent BEAT), up 12.9%. GAAP income from operations $716M, up 48.4%; net income from continuing operations $665M, up 152.1%. Adjusted operating income $715M, up 6.9% reported and 6.7% ORGANIC. The 8-K was accepted 6:32am ET, BEFORE the open, so Thursday Aug 6 was the reaction session: $74.49 to $72.92, down 2.11% on 4,312,600 shares. Friday Aug 7 closed $73.89. Burger King in the United States comped +8.5%, its best quarter in years - and we tested it for a soft base and LOST. The two-year stack doubled from 4.7% to 10.0%, so the turnaround is real. It still added only $16M to a company that earned $715M of adjusted operating income - 2.2% of the line - because Burger King is 19.2% of the profit and Tim Hortons is 40.1%. Tim Hortons comped +0.1%, and the revenue it did add was supply chain: +$56M of the segment's +$54M came from selling franchisees ingredients and packaged goods at higher commodity prices, at a 16.7% incremental margin against a 25.2% segment average. Popeyes US fell 5.2%, a fifth straight decline. So ORGANIC adjusted operating income grew 6.7% - below the company's own 8%+ algorithm - and the stock fell 2.1%. The +48.4% GAAP operating income headline is not operations: a $175M swing in other operating income (a $50M currency remeasurement GAIN vs a $207M LOSS) plus a $160M tax swing (a $73M benefit vs an $87M expense on an intra-group reorganisation) is $335M of the $401M net income increase - 83.5% of it. THE CALL: HOLD (3/5, FAIR VALUE $74 vs THE $73.89 CLOSE - 0.1% ABOVE THE PRICE AND 11.6% BELOW WALL STREET) — base-case value ~$74.0 vs ~$73.89 today. KEY METRICS: - CALL: HOLD 3/5, fair value $74 vs the $73.89 Aug 7 close = 0.1% above. Bull $83, bear $65, buy under $63. 460M diluted units (349M shares + ~111M RBI LP exchangeable) = $33.99B equity, EV $46.54B = 15.1x LTM adj EBITDA of $3.083B. Net debt $12.546B, 4.1x. - Street: Buy. 44 analysts, 27 buy / 15 hold / 2 sell, target $83.62 (median $84), +13.2%. We are 11.6% below. What to watch: UP: Burger King US comparable sales +8.5% with the two-year stack doubling to 10.0% - a real turnaround, not a base effect; segment operating income +13.2%. International compounding on both axes: +5.5% comparable sales on +5.1% net restaurant growth, 16,570 restaurants (up 803). Net leverage down from 4.6x to 4.1x. LTM free cash flow $1.632B. A 3.5% dividend yield ($0.65/quarter) with $829M of buyback authorisation left. H1 organic AOI growth of 8.5% is AT the 8% algorithm. DOWN: 40.1% of adjusted operating income is Tim Hortons, which comped +0.1% and grew revenue only by passing commodity inflation through its supply chain at a slightly worse margin. Popeyes US -5.2% for a fifth straight quarter. International profit growth fell from +42% in Q1 to +13.2%. Organic AOI grew 6.7% - below algorithm - in Burger King's best quarter. And $749M was returned in H1 against $648M of free cash flow: 116%. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.