Restaurant Brands (QSR) Stock Valuation: 18x Earnings, a 3.6% Dividend and a Hold at $73.01

Restaurant Brands International reported a third quarter in which net income from continuing operations rose 60% and adjusted earnings per share rose 7%. The gap between the two figures is a $133 million income tax benefit from internal reorganizations, not a change in what the restaurants earn. The business itself grew steadily: system-wide sales rose 6.2% and adjusted operating income rose 5.0% in the quarter. At $73.01, the shares already pay for that pace for a long time.

At $73.01 on October 29, 2026, the shares trade 24.2% above my Base value of $58.77, so the Base is 19.5% below the price. The Bear value of $41.69 is 42.9% below the price and the Bull value of $74.50 is 2.0% above it. I assign no probabilities to the cases. The required margin of safety of 30% gives a buy range of $38.83 to $44.60 and a conservative limit of $38.83. For existing holders this is a hold, and the 3.6% dividend is a reason to wait. For new money, it is a watchlist name.

Valuation route: Franchised restaurant brands with a leveraged balance sheet, valued on free cash flow. Economic classification: quality franchise with moderate growth and high leverage. Primary method: ten years of free cash flow to shareholders per share, with stock pay treated as a cash cost, and a terminal value. Cross-check: 14 times adjusted EBITDA after stock pay, less net debt. Values are present fair-value estimates, not 12-month price targets.

What Restaurant Brands is

Restaurant Brands owns five quick-service brands and licenses almost all of the restaurants to franchisees: Tim Hortons, Burger King, Popeyes, Firehouse Subs and a large international business. At September 30, 2026 the system had 33,401 restaurants. The company collects royalties on franchisee sales, rent from some properties and supply chain income, and it carries little of the cost of running a restaurant.

Tim Hortons and the international segment are the main earners. In the first nine months of 2026, Tim Hortons produced $833 million of adjusted operating income and international $596 million, together about 70% of the total of $2,061 million. Burger King contributed $388 million, Popeyes $177 million and Firehouse Subs $47 million.

The company also owns a small restaurant holdings segment, which holds restaurants bought from the Carrols franchisee. Management plans to sell most of them to new franchisees and close the segment. Burger King China was moved into a joint venture with CPE in January 2026, and Restaurant Brands kept a 17% equity interest.

The latest quarter

Third quarter 2026	Result	Comment
Total revenues	$2,525 million	up from $2,449 million
Adjusted operating income	$737 million	up 5.0%, organic growth 6.7%
Adjusted earnings per share	$1.10	up from $1.03; organic growth 8.6%
Reported earnings per share	$1.54	includes a $133 million tax benefit
System-wide sales growth	6.2%	constant currency; comparable sales 3.8%
Net restaurant growth	3.0%	against a long-term target of 5% or more
Adjusted EBITDA	$829 million	$3,117 million over the last twelve months

Brand, third quarter	Comparable sales	Net restaurant growth	Adjusted operating income
Tim Hortons	1.5%	1.0%	$317 million (up from $304 million)
Burger King	8.3%	-0.9%	$136 million (up from $123 million)
Popeyes	-1.8%	0.0%	$58 million (down from $63 million)
Firehouse Subs	1.5%	7.8%	$16 million (up from $14 million)
International	3.9%	5.6%	$205 million (up from $189 million)

Two details matter. The strong Tim Hortons quarter was helped by tariff refunds, which will not repeat. Burger King's 8.3% comparable sales growth is the result of the Reclaim the Flame program, which has a budget of up to $700 million through 2028. Popeyes comparable sales have fallen 4.5% over nine months.

What the earnings are made of

Adjusted earnings per share is the figure that matters. It is stated on a fully exchanged basis, so it treats the Partnership exchangeable units as common shares. Adjusted net income of $505 million over 457 million diluted shares gives $1.10.
Reported net income is not a guide. Net income from continuing operations was $704 million in the quarter, but $133 million of it was a discrete tax benefit. The adjusted tax rate was about 17.4%.
Stock pay is a real cost. Adjusted EBITDA adds back about $34 million of share-based compensation a quarter. I deduct about $136 million a year in my cash flow model and in the earnings multiple cross-check.
Free cash flow is solid. Operating cash flow was $1,308 million over nine months, capital spending $181 million, and free cash flow $1,127 million, up from $996 million.

Over the last twelve months, my free cash flow is $1,580 million, less about $50 million of franchisee inducements, which I estimate from the nine-month total of $38 million, and $136 million of stock pay. That gives about $1,394 million, or $3.05 a share on 457 million diluted shares.

Capital, debt and shares

Item (September 30, 2026)	Value
Total debt	$13,588 million
Cash and cash equivalents	$974 million
Net debt	$12,614 million (4.0x adjusted EBITDA, 4.4x a year earlier)
Adjusted net interest expense, 2026 guidance	$500 million to $520 million
Common shares outstanding	348.6 million
Diluted shares including Partnership units (Q3 average)	457 million
Noncontrolling interests	$1,588 million (mostly the units)
Share repurchases in Q3	$61 million of shares and $214 million of units
Authorization remaining (October 23)	$751 million

I use the diluted count of 457 million for every per-share value, because the Partnership units get the same distribution as the shares and can be exchanged one for one. For the same reason I do not subtract the noncontrolling interest again. Operating leases of $1.9 billion are not added to debt, on the view that the rent is already expensed in adjusted EBITDA. I assume no new borrowing for growth.

Primary valuation: free cash flow per share

Base: free cash flow of $3.05 a share growing 7.0%, 7.0%, 6.5%, 6.0%, 5.5%, 5.0%, 4.5%, 4.0%, 3.5% and 3.0% over ten years. That is $3.26 in year one and $4.16 in year five, a five-year growth rate of 6.4% a year. Cost of equity 9.5%, terminal growth 2.5%.
Result: $55.47 a share. The terminal value is 53.9% of it, over a ten-year horizon.

The growth path is below management's long-term algorithm of 8% organic operating income growth. I use less because interest expense does not fall as fast as operating income grows, net restaurant growth is 3.0% against the 5% target, and Popeyes is shrinking. The 9.5% cost of equity reflects a stable franchise with 4.0 times leverage. A terminal share of 54% is below the 75% attention level for a ten-year horizon.

Cost of equity	Terminal growth 2.0%	2.5%	3.0%
8.5%	$61.94	$65.05	$68.73
9.5%	$53.34	$55.47	$57.92
10.5%	$46.78	$48.29	$50.01

Every cell is below the $73.01 price. The cost of equity matters most: one point is worth about $7 a share.

Secondary valuation: EBITDA multiple

Adjusted EBITDA of $3,117 million less $136 million of stock pay is $2,981 million. At 14 times, the enterprise value is $41.7 billion, less net debt of $12.6 billion, which leaves $29.1 billion, or $63.72 a share. The market currently pays 14.8 times the unadjusted figure.

I use 14 times and not a higher multiple because growth in operating income is 5% to 7% a year, not 8%, and because 4.0 times leverage means that a small change in the multiple moves the equity value by a larger percentage. Each turn of the multiple is worth about $6.5 a share. The range of 11.5 times in the Bear and 16.5 times in the Bull shows how much of the answer the multiple carries.

The two methods share the same operating income growth and the same cash costs. They differ in the cost of equity, which the first method uses and the second does not. Their agreement is therefore weaker evidence than it looks, and I give it no extra Confidence.

Historical cross-check and growth diagnostic

Adjusted earnings per share rose from $3.34 in 2024 to $3.69 in 2025, up 10.7%, and the first nine months of 2026 are up 11.0% from the same period of 2025. Growth is structural for the royalty business and international expansion, and acquisition-affected for Burger King, where the restaurants bought from Carrols changed the base. I did not collect a long history of the share price multiple, so the historical component of the valuation score is neutral.

Part of the recent growth in earnings per share came from lower interest expense: $372 million in nine months against $391 million a year earlier, and from the deconsolidation of Burger King China. That support will fade as the debt falls more slowly.

Valuation triangulation

Primary (free cash flow per share): $55.47, weight 60%.
Secondary (14 times EBITDA after stock pay): $63.72, weight 40%.
Divergence between the two: 13.8% of their midpoint, inside the 20% limit.
Weighted Base: $58.77. The unweighted range of $55.47 to $63.72 is the honest uncertainty, and $58.77 is a point inside it.

I weight the cash flow model higher because it shows growth, interest and the cost of equity separately. Both values are below the price, so the weights do not change the verdict.

What is the market already pricing in?

Reverse valuation	Result
Cost of equity that equates the Base cash flows to $73.01	7.9% (my requirement 9.5%)
Constant ten-year growth in free cash flow needed at 9.5%	9.1% a year (Base 6.4% over five years)
Five-year return at an unchanged free cash flow yield	about 10.6% a year (6.4% growth plus a 4.2% yield)
Five-year return if the price falls to the Base multiple	about 5.6% a year including a 3.6% dividend

A buyer at $73.01 earns about 10.6% a year only if the market keeps paying 24 times free cash flow. If the multiple moves to the 19 times that my Base value implies, the return falls to about 5.6% a year, below my cost of equity. The price needs both steady growth and a lasting premium.

Bear, base and bull scenarios

Case	Cash flow model	EBITDA multiple	Blended	Versus price
Bear	$37.89	$47.41	$41.69	-42.9%
Base	$55.47	$63.72	$58.77	-19.5%
Bull	$70.82	$80.03	$74.50	+2.0%

Bear: free cash flow growth of 3% fading to 2%, cost of equity 10.5%, terminal growth 2.0%, and 11.5 times EBITDA. Comparable sales weaken, Tim Hortons stalls and Popeyes keeps shrinking.
Base: as described above.
Bull: growth of 10% fading to 3.5%, cost of equity 9.0%, terminal growth 3.0%, and 16.5 times EBITDA. Burger King holds its gains, net restaurant growth reaches the 5% target and Popeyes recovers.

Even the Bull case is only 2.0% above the price. The asymmetry is poor: 43% below in the Bear and 2% above in the Bull.

How the buy price is set

Confidence is B, which calls for a margin of safety of 25% to 35%. I use 30%. The margin is applied once, to each method, and the leverage of 4.0 times is already in the cost of equity and the scenarios, so I add no further modifier.

Method	Value	Buy price at a 30% margin
Cash flow model	$55.47	$38.83
EBITDA multiple	$63.72	$44.60
Weighted Base	$58.77	$41.14

The conservative limit is $38.83 and the range is $38.83 to $44.60. A price this low would need a market fall or a company-specific problem, so I would check why before treating it as a bargain. The price is above all three entry values, so the verdict is Hold and not Buy.

Dividend and buybacks

The company declared $0.65 a share for the fourth quarter, payable January 5, 2027, and targets $2.60 for 2026, a yield of 3.56%. It paid $875 million of dividends and distributions in nine months and bought back $444 million of shares and units, a total of $1.3 billion returned. The $2.60 dividend takes about 85% of my free cash flow of $3.05 a share, so it is covered, but it leaves little room for faster debt repayment. Buybacks of $275 million in the third quarter are about 0.8% of the market value in a single quarter.

Reasons to own QSR

An asset-light royalty model with $1,127 million of free cash flow in nine months, up 13%.
System-wide sales growth of 6.2% and net restaurant growth of 3.0%, led by the international segment at 9.0%.
Burger King comparable sales of 8.3% show that the turnaround is working, with $198 million of the planned $550 million remodel spending already funded.
A 3.56% dividend, and leverage down from 4.4 times to 4.0 times in a year.

What could go wrong?

Tim Hortons, the largest earner, has comparable sales of 1.5% and benefited from tariff refunds that will not recur.
Popeyes comparable sales are falling, with a decline of 4.5% over nine months.
Net debt of $12.6 billion is a heavy load. A rise of one point in the cost of refinancing costs about $0.14 billion of interest a year on the whole amount, and the cost of equity rises with it.
Franchisees carry the capital costs of remodels and new units, so weak franchisee profits can slow growth.
Reported and adjusted figures differ, and the adjustments change from year to year.

Management execution

Organic operating income growth is 7.8% over nine months and management says it is on track for 8% for the year.
Leverage fell to 4.0 times and the dividend was raised to $2.60 for 2026.
The Carrols restaurants and the start-ups in China and Brazil are being sold or closed out, a simplification of the portfolio.
I give a neutral view on the Popeyes decline, which management has not yet reversed.

Stock Analyza scorecard

Business quality	Score
Moat and pricing power	16/20
Economic return over cost of capital	14/20
Balance sheet and resilience	7/15
Earnings quality	9/15
Growth and runway	11/15
Management and capital allocation	7/10
Dilution and governance	3/5
Total	67/100

The valuation score is 38 of 100, in the overvalued band of 25 to 44.

Valuation score	Score
Discount to the weighted Base (-19.5%)	9/40
Protection against the Bear (-42.9%)	6/20
Agreement between methods (13.8% divergence)	12/15
Historical valuation (no history collected, neutral)	5/10
Asymmetry of market expectations	2/10
Data and model penalty	4/5
Total	38/100

Business quality and valuation are shown separately and are not averaged. A good franchise at a price above its value is still a hold.

Confidence score

Confidence	Score
Data and sources	4/5
Business predictability	4/5
Valuation robustness (54% terminal share, shared drivers)	4/5
Accounting transparency (adjusted measures, tax benefit)	3/5
Scenario dispersion ($41.69 to $74.50)	3/5
Total	18/25, grade B

The grade measures how well the model is identified, not the chance of a loss. The exact Partnership unit count and the full-year inducement figure are not in the release, and I estimated them.

What I would watch from here

Green

Tim Hortons comparable sales above 3% without one-time help.
Net restaurant growth moves toward 4% and 5%.
Net leverage falls below 3.8 times without a cut in the dividend.

Yellow

Burger King comparable sales fall back below 4%.
Popeyes comparable sales stay negative into 2027.
The gap between adjusted and reported earnings widens again.

Red

Organic operating income growth falls below 5% for two quarters.
Refinancing at rates well above the current coupons.
Franchisee distress or closures at Burger King in the United States.

The three most important thesis breakers

Tim Hortons turns from slow growth into decline, which removes the largest source of profit.
The Burger King recovery fades once the remodel spending ends, and comparable sales fall back to zero.
The cost of equity rises to 10.5% or the multiple falls to 11.5 times, either of which cuts the value to the $41 to $48 range.

Stress test and independent check

I recomputed the values with a separate script and checked the reverse valuation by solving for the cost of equity and for the growth rate. That checks the arithmetic, not the forecasts. The inputs below are estimates and not reported figures.

Input	Status
Free cash flow of the last twelve months ($1,580 million)	Calculated: full year 2025 plus nine months of 2026 less nine months of 2025
Stock pay ($136 million)	Calculated from $34 million a quarter
Franchisee inducements ($50 million)	Estimate from $38 million in nine months
Diluted shares (457 million)	Reported Q3 weighted average; the unit count is not stated
Noncontrolling interests ($1,588 million)	Not deducted, because the units are in the share count
Cost of equity (9.5%)	My judgment; sensitivity shown

The weakest point of the model is the cost of equity together with the multiple, both of which are judgments. The strongest bull argument is that Burger King's recovery and international growth let operating income grow at the 8% target for years, and the market is right to pay for it. The strongest bear argument is that a 4.0 times leveraged franchisor with a shrinking Popeyes and a slow Tim Hortons deserves a lower multiple than the market pays.

Final verdict: hold at $73.01, do not add

Restaurant Brands is a high-quality royalty business with a rising dividend and falling leverage. At $73.01, the market pays for growth that I can only partly underwrite, and there is no margin of safety.

Verdict: HOLD at $73.01, do not add. Weighted Base $58.77, 19.5% below the price, cross-check $63.72, Confidence B (18/25). Required margin of safety 30%, buy range $38.83 to $44.60, conservative buy limit $38.83.

For an existing holder, the original cost of the shares is irrelevant, and nothing here says to sell: the price is close to my Bull value, the dividend is covered and the business is improving. A review is warranted if the price rises well above the Bull value of $74.50 without a change in fundamentals, or if Tim Hortons turns negative. New money waits for a price at or below $44.60.

Sources

Primary sources are Restaurant Brands International's third quarter 2026 earnings release and its fourth quarter and full year 2025 release.

The reference market price is $73.01, the October 29, 2026 regular session close from a public price history, checked against a broker quote of $73.02 on October 30. Balance sheet figures are as of September 30, 2026.