Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Restaurant Brands International (NYSE:QSR). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
How Fast Is Restaurant Brands International Growing?
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Over the last three years, Restaurant Brands International has grown EPS by 15% per year. That growth rate is fairly good, assuming the company can keep it up.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for Restaurant Brands International remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 11% to US$6.8b. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Restaurant Brands International.
Are Restaurant Brands International Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
We did see some selling in the last twelve months, but that's insignificant compared to the whopping US$30m that the Executive Chairman, J. Doyle spent acquiring shares. The average price of which was US$60.77 per share. Big purchases like that are well worth noting, especially for those who like to follow the insider money.
The good news, alongside the insider buying, for Restaurant Brands International bulls is that insiders (collectively) have a meaningful investment in the stock. We note that their impressive stake in the company is worth US$289m. We note that this amounts to 1.0% of the company, which may be small owing to the sheer size of Restaurant Brands International but it's still worth mentioning. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.
Is Restaurant Brands International Worth Keeping An Eye On?
As previously touched on, Restaurant Brands International is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. We should say that we've discovered 2 warning signs for Restaurant Brands International (1 is concerning!) that you should be aware of before investing here.
Keen growth investors love to see insider buying. Thankfully, Restaurant Brands International isn't the only one. You can see a a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.