RBC Analysts: Burger King Promotions Going Well, Strong Quarter Expected From Tim Hortons

RBC said Burger King's U.S. SSS trends likely rebounded in July and expects another strong quarter from Tim Hortons. Both Burger King and Tim Hortons are owned by Restaurant Brands International Inc (NYSE: QSR).

However, the brokerage still expects a SSS decline of 1 percent for Burger King U.S. in the second quarter, as the successful 10 for $1.49 chicken nugget promotion made for a tough year-over-year comparison.

That said, analyst David Palmer noted that trends appear to have improved to the 1–2 percent range in recent weeks, with the successful Mac n' Cheetos promotion and value marketing.

Related Link: RBC's Got No Beef With McDonald's, Says Buy The Pullback

"In addition, hot dogs appear to be a solid contributor to sales with about a mid-single-digit menu mix (and high margin contribution)," Palmer wrote in a note.

For Tim Hortons, the analyst expects SSS growth of 5 percent for both Tim's U.S. and Canada and another quarter of strong profitability in the supply chain. Palmer projects second-quarter EPS of $0.35 (+18 percent year-over-year; consensus $0.35).

On the earnings call, the analyst would look for more color on the recent partnerships for Tim Horton's expansion outside of Canada and future technology solutions, including mobile ordering. Palmer has an Outperform rating on Restaurant Brand shares.

At time of writing, shares of Restaurant Brands fell 1.05 percent to $44.50.

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