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Restaurant Brands International WACC %

:6.22% (As of Today)
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As of today (2021-10-20), Restaurant Brands International's weighted average cost of capital is 6.22%. Restaurant Brands International's ROIC % is 7.94% (calculated using TTM income statement data). Restaurant Brands International generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Restaurant Brands International WACC % Historical Data

The historical data trend for Restaurant Brands International's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Restaurant Brands International Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.90 8.41 7.36 6.34 6.10

Restaurant Brands International Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.53 6.20 6.10 6.67 6.50

Competitive Comparison

For the Restaurants subindustry, Restaurant Brands International's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Restaurant Brands International WACC % Distribution

For the Restaurants industry and Consumer Cyclical sector, Restaurant Brands International's WACC % distribution charts can be found below:

* The bar in red indicates where Restaurant Brands International's WACC % falls into.



Restaurant Brands International WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Restaurant Brands International's market capitalization (E) is $18759.113 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2021, Restaurant Brands International's latest two-year average Short-Term Debt & Capital Lease Obligation was $237.5 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $13557 Mil. The total Book Value of Debt (D) is $13794.5 Mil.
a) weight of equity = E / (E + D) = 18759.113 / (18759.113 + 13794.5) = 0.5763
b) weight of debt = D / (E + D) = 13794.5 / (18759.113 + 13794.5) = 0.4237

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 1.26300000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Restaurant Brands International's beta is 1.22.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 1.26300000% + 1.22 * 6% = 8.583%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2020, Restaurant Brands International's interest expense (positive number) was $491 Mil. Its total Book Value of Debt (D) is $13794.5 Mil.
Cost of Debt = 491 / 13794.5 = 3.5594%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 15.785%.

Restaurant Brands International's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.5763*8.583%+0.4237*3.5594%*(1 - 15.785%)
=6.22%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Restaurant Brands International  (NYSE:QSR) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Restaurant Brands International's weighted average cost of capital is 6.22%. Restaurant Brands International's ROIC % is 7.94% (calculated using TTM income statement data). Restaurant Brands International generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Restaurant Brands International Business Description

Restaurant Brands International logo
Industry
Consumer Cyclical » Restaurants NAICS : 722511 SIC : 9211
Traded in Other Exchanges
Address
130 King Street West, Suite 300, P.O. Box 339, Toronto, ON, CAN, M5X 1E1
Restaurant Brands International is one of the largest restaurant companies in the world, with $31 billion in 2020 systemwide sales across a footprint that spans more than 27,000 restaurants and 100 countries. The firm generates revenue primarily from retail sales at its company-owned restaurants, royalty fees and lease income from franchised stores, and from its Tim Horton's supply chain operations. Formed in 2014 after 3G Capital's acquisition of Tim Horton's International, the Restaurant Brands portfolio now includes Burger King (18,700 units), Tim Horton's (5,000 units), and Popeyes Louisiana Kitchen (3,575 units).
Executives
Siddiqui Sami A. officer: Brand Pres., Popeyes, Americas C/O RESTAURANT BRANDS INTERNATIONAL INC. 5707 BLUE LAGOON DRIVE MIAMI FL 33126
Machado Fernando officer: Chief Marketing Officer 5707 BLUE LAGOON DRIVE MIAMI FL 33126
Schwan Axel Mr officer: Pres., Tim Hortons Americas 5505 BLUE LAGOON DRIVE MIAMI FL 33126
Kobza Joshua officer: COO 5505 BLUE LAGOON DRIVE MIAMI FL 33126
Finazzo Christopher L. officer: See Remarks 5707 BLUE LAGOON DRIVE MIAMI FL 33126
Dunnigan Matthew officer: CFO 5505 BLUE LAGOON DRIVE MIAMI FL 33126
Cil Jose E. officer: Chief Executive Officer 5505 BLUE LAGOON DRIVE MIAMI FL 33126
Friesner Jacqueline officer: See Remarks 5505 BLUE LAGOON DRIVE MIAMI FL 33126
Granat Jill officer: See Remarks 5505 BLUE LAGOON DRIVE MIAMI FL 33126
Melbourne Jason director C/O RESTAURANT BRANDS INTERNATIONAL INC. 5707 BLUE LAGOON DRIVE MIAMI FL 33126
Athayde Felipe A officer: Brand Pres., Popeyes, Americas 5707 BLUE LAGOON DRIVE MIAMI FL 33126
3g Restaurant Brands Holdings Lp 10 percent owner C/O 3G CAPITAL INC. 600 THIRD AVENUE, 37TH FLOOR NEW YORK NY 10016
3g Restaurant Brands Holdings General Partner Ltd. 10 percent owner C/O 3G CAPITAL INC. 600 THIRD AVENUE, 37TH FLOOR NEW YORK NY 10016
Sicupira Carlos Alberto director 5505 BLUE LAGOON DRIVE MIAMI FL 33126
De Limburg Stirum Maximilien director C/O RESTAURANT BRANDS INTERNATIONAL INC. 5707 BLUE LAGOON DRIVE MIAMI FL 33126

Restaurant Brands International Headlines

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