Update: Tim Hortons' Q2 Earnings

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 |  About: Restaurant Brands International Inc. (QSR)
by: Zachary Chippin

Summary

THI beat analyst estimates in its latest quarter.

Q2 earnings is the first step to confirming my thesis that Tim Hortons is a solid dividend growth investment.

In my original article, I attributed future growth to succeeding in the US market, but did not expect it to succeed in the short term.

Over the past week, Tim Horton's (THI) stock has seen a significant boost after reporting its Q2 earnings. The stock is up roughly 13% over the past week due to beating analyst estimates on EPS by $0.06 and raising its outlook for the year. The appreciation in the stock price by beating the analysts will obviously make current investors extremely happy. However, I am more focused on the 5.9% same store sales growth that occurred in US operations and the long term success of THI.

As I mentioned in my original article, the Canadian business is mature, and will provide the cash flows for the company. The growth will need to come out of the US, which has been relatively hard for the company to achieve. The 5.9% growth in the US came to a surprise to many and was at the high end of the range THI thought it could achieve. They attributed a large part of its success to new products offered to consumers (frozen hot chocolate) and continuing innovation of their Iced Capp. It is encouraging to see that the company has been able to cater their products to the American consumer.

Overall, the Q2 for THI was all investors could ask for. The quarter was a step in the right direction, and hopefully for investors THI can continue to expand its operations in the US while maintaining its dominance in the Canadian market.

Disclosure: The author is long THI. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.