Restaurant Brands Intl. scores 41 for management and 54 for moat. The management score rests on a return on invested capital of 6.9% and a gross margin of 41.1% — figures that describe returns closer to the cost of the capital behind them. The balance sheet carries debt at 4.84x equity, which magnifies both the returns above and the risk beneath them.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 13.7% a year, below the 14.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 27.4x. That produces an intrinsic value of $82.70, a 10-CAP price of $35.98 and a payback time price of $53.50, with the value zone set at the highest of the three, $53.50. Today's price of $69.76 is 30% above it.
The price is above the value zone and the business scores 54 for moat and 41 for management. Neither test argues for paying up here.
| Price | $69.76 |
| Market cap | $24.2B |
| P/E ratio | 20.6x |
| Return on invested capital | 6.9% |
| Gross margin | 41.1% |
| Debt to equity | 4.84x |
| Free cash flow yield | 6.4% |
| Growth rate used | 13.7% |
| Growth rate measured | 14.0% |
| Exit multiple assumed | 27.4x |
| Company | Moat | Buy price |
| Darden Restaurants (DRI) | 66 | $160.15 |
| Yum China Holdings Inc (YUMC) | 58 | $36.52 |
| Yum! Brands Inc. (YUM) | 67 | $73.33 |
| Domino's (DPZ) | 67 | $207.33 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Restaurant Brands Intl. rather than accepting ours.