Is Restaurant Brands International (QSR) Still Undervalued Amid Rising Earnings and Franchise-Driven Growth?

The fast-food sector in 2025 remains a battleground of resilience and reinvention. As consumer preferences shift toward value-driven dining and digital convenience, companies like Restaurant Brands International (QSR) are navigating a landscape marked by both opportunity and volatility. With QSR's portfolio anchored by Tim Hortons, Burger King, and Popeyes, the company has positioned itself as a key player in global quick-service restaurant (QSR) markets. Yet, as earnings rise and franchise-driven growth accelerates, the question lingers: Is QSR still undervalued, or has its valuation caught up to its fundamentals?

Valuation Metrics: A Premium or a Discount?

Restaurant Brands International's valuation metrics paint a nuanced picture. As of November 2025, QSR trades at a price-to-earnings (P/E) ratio of 23.90, exceeding the U.S. Hospitality industry average of 21.1x and its peer group average of 23.1x. This suggests investors are paying a premium for QSR's earnings relative to the sector. Historically, QSR's P/E has averaged 22.96 over the past decade, meaning its current multiple is above this benchmark.

The company's price-to-book (P/B) ratio further complicates the narrative. While Yahoo Finance reports a P/B of 7.51 for 2025, Macrotrends data shows a more recent P/B of 4.39 in November 2025, with fluctuations between 4.23 and 4.44 in earlier quarters according to Macrotrends. This discrepancy highlights the dynamic nature of QSR's valuation, influenced by earnings volatility and asset revaluations. By comparison, the sector's median P/B ratio has historically been 12.0x according to Finbox, indicating QSR's current multiple is significantly lower than its long-term average.

The PEG ratio, which adjusts for growth expectations, reveals further divergence. QSR's PEG ratio is cited as 2.19 as of December 2025, 2.99 in another report according to Zacks, and 1.15 for the 5-year expected period according to Yahoo Finance. These variations reflect differing methodologies and timeframes, but collectively, they suggest that QSR's valuation is either modestly justified (at 1.15) or overpriced relative to growth (at 2.99).

Earnings Growth: Outpacing the Sector?

QSR's earnings trajectory appears to outperform the broader fast-food sector. The company reported 10.7% year-over-year adjusted earnings per share (EPS) growth in Q3 2025, driven by 8.8% organic adjusted operating income (AOI) growth according to RBI. This performance is anchored by Tim Hortons and international markets, which together account for 70% of QSR's earnings according to RBI. Tim Hortons, in particular, delivered 4.2% same-store sales growth in Q3 2025, bolstered by expanded food menus and cold beverage innovations.

In contrast, the U.S. fast-food sector's average earnings growth is less defined. While industry revenue reached $412.7 billion in 2025, growing at a 3.7% compound annual growth rate (CAGR) over five years according to IbisWorld, specific earnings growth rates remain elusive. McDonald's, a sector leader, reported a 2.4% rise in U.S. same-store sales but missed EPS expectations according to CNBC. Yum! Brands, which operates KFC and Taco Bell, saw mixed results, with Taco Bell's $3 Y2K menu driving traffic gains according to Placer AI. These comparisons underscore QSR's ability to outperform peers through disciplined franchisee alignment and international expansion.

Valuation Dislocation and Growth Premium

The dislocation between QSR's valuation and its growth prospects hinges on two factors: sector dynamics and investor sentiment. QSR's P/E premium over the sector average (23.90 vs. 21.1x) implies investors expect stronger earnings growth than the industry norm. However, this premium must be weighed against QSR's traffic challenges. The company reported a 3.3% year-over-year decline in overall traffic in Q3 2025, driven largely by Burger King's 3.6% drop in same-store visits according to Placer AI. Firehouse Subs, QSR's fast-casual unit, bucked this trend with 1.6% traffic growth according to Placer AI, but its contribution remains limited.

Meanwhile, the sector's growth premium is tempered by macroeconomic headwinds. Rising labor and supply costs, coupled with consumer caution, have forced chains to prioritize value menus and digital transformation. QSR's focus on franchisee alignment-reducing operational costs and boosting margins-positions it to capitalize on these trends. However, its PEG ratio of 2.99 suggests the market may be discounting its long-term growth potential.

Strategic Positioning: Franchise-Driven Growth and Global Expansion

QSR's franchise model is a cornerstone of its strategy. By shifting to a franchise-centric approach, the company has reduced capital expenditures and improved cash flow, enabling reinvestment in high-growth markets. International expansion, particularly in Western Europe, China, and Japan, has been a key driver of AOI growth according to RBI. Tim Hortons' global footprint, in particular, has proven resilient, with 6.5% same-store sales growth in Q3 2025.

Yet, challenges persist. Burger King's U.S. performance, while showing 3.1% same-store sales growth in Q3 2025 according to CNBC, lags behind competitors like McDonald's, which maintains a 32.21% net profit margin according to Toasttab. Popeyes' 2.4% decline in same-store sales further highlights the fragility of QSR's brand portfolio according to CNBC.

Conclusion: A Tenuous Balance

Restaurant Brands International's valuation appears to straddle the line between undervaluation and overvaluation. While its P/E premium and PEG ratio suggest the market is skeptical of its long-term growth, QSR's earnings momentum and franchise-driven strategy offer a compelling case for optimism. The company's ability to outperform the sector in organic AOI growth and international expansion justifies a modest premium, particularly in a landscape where traffic declines and margin pressures are widespread.

However, investors must remain cautious. QSR's traffic challenges and the sector's competitive intensity-exemplified by McDonald's and Yum! Brands' innovations-mean that maintaining this growth premium will require continued execution. For now, QSR's valuation reflects a market that is neither fully convinced nor entirely dismissive of its potential.