RBI Reaffirms Growth Targets and Announces $1.6B Capital Return for 2026

What happened

Restaurant Brands International hosted its 2026 Investor Day, reiterating its long-term growth algorithm including 8%+ organic adjusted operating income growth and 5%+ net restaurant growth by 2028. The company also plans to return over $1.6 billion to shareholders in 2026 through dividends and resumed share buybacks, projecting confidence in cash flow generation. According to the DeepValue master report, QSR is currently rated 'WAIT' with moderate conviction, as the stock at $69.02 already prices in this growth algorithm, offering limited upside without evidence of sustained acceleration. The report emphasizes that while Tim Hortons and International segments drive approximately 70% of earnings, Burger King U.S. and Popeyes introduce downside risks from cost volatility and negative comps. Despite the reaffirmed targets, underlying concerns like high leverage at 5.5x EBITDA and Popeyes' underperformance remain unaddressed, requiring cautious investor scrutiny.

Implication

For investors, the capital return plan enhances shareholder yield but must be weighed against RBI's elevated leverage and ongoing capital needs for initiatives like Burger King U.S. remodels. The growth targets align with the base case in the DeepValue report, implying a fair value around $75, but upside to $85 requires execution improvements in U.S. segments and Popeyes' comps turning positive. Key monitoring points include upcoming quarterly earnings to test if organic AOI growth can sustain at 8% or higher, as upgrades to a 'BUY' rating hinge on this. Without material operational improvements, the stock's valuation at 24.5x EPS offers mid-single-digit annualized returns, reinforcing the wait stance with interest near $63. Investors should consider trimming positions above $80, as per the report's guidance, while watching for early stress signals like Popeyes' continued negative comps.

Thesis delta

The news reinforces management's commitment to the growth algorithm but does not provide new evidence to shift the thesis from 'WAIT' to 'BUY', as it lacks confirmation of sustained AOI growth above 8% or resolution of key risks like cost inflation. Capital return is a positive but expected move given cash flow projections, and it does not mitigate core challenges such as high leverage or brand-specific underperformance, keeping the investment case unchanged.