Since its IPO in 2014, Restaurant Brands International (TSX:QSR) has provided long-term investors with impressive growth. This is a stock that's roughly doubled from its initial public offering, providing investors with impressive dividend income as well over this timeframe. As a top quick service restaurant provider, there are many investors who look to this dividend stock to provide the sort of defensive long-term growth and stability that's hard to find in this market.
Let's dive into why QSR stock certainly looks like a tremendous bargain at current levels.
Defensiveness matters
Before we dive too deep into the numbers and Restaurant Brands' valuation, it's important to consider the qualitative metrics many investors consider when looking at a stock like this. Restaurant Brands' underlying business is very recession-resistant. In tough times, consumers looking to dine out may put more of their budgets toward lower-cost dining away from home options. This trade-down effect could certainly bolster Restaurant Brands' market share further, with strong gains seen from certain portfolio companies like Popeye's likely to accelerate even higher.
This is a diversified fast food operator, with four of the world's best-known brands and more than $40 billion in system-wide annual sales. With more than 31,000 restaurants spread across more than 100 countries, this is a business that's more pervasive than many give it credit for.
Valuation matters
Given Restaurant Brands' impressive growth in recent years, the company's price-earnings multiple has come down consistently. Indeed, this stock was trading above 30 times earnings when I started looking at it. Today, QSR stock can be bought for around 18 times earnings (and cheaper on a forward basis). This is a growth stock that's not receiving a growth multiple. In fact, its multiple has come down considerably in recent years.
This dynamic makes Restaurant Brands one of the top growth-at-a-reasonable-price picks in the market, in my view. As the company continues to drive digital innovation, focus on exceptional guest experiences, and drive strategic shifts into new markets, I think it's a company with plenty of upside from here.
Bottom line
There are few companies that provide the sort of defensiveness, solid long-term growth, dividend yield (currently sits at around 3.1%) and attractive valuation that Restaurant Brands does. This stock checks all my boxes. Indeed, that's the key reason I've been pounding the table on this name for such a long time.
For whatever reason, the market seems to not want to give this stock the valuation it deserves. For long-term value investors, that indicates this stock remains a top option to buy right now.
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