Is Restaurant Brands International (TSE:QSP.UN) a Buy Amid Its 11% Q3 Decline?

Restaurant Brands International (QSP.UN) has faced a 11% stock price decline in Q3 2025, driven by short-term earnings misses and macroeconomic headwinds. Yet, for contrarian value investors, this selloff may represent an opportunity to capitalize on a fundamentally strong business with a track record of outperformance. Over the past five years, the stock has delivered a 37% total shareholder return, outpacing the broader market, while maintaining a 6.2% compound annual growth rate in earnings per share (EPS) and a robust return on equity (ROE) of 24% [3].

Long-Term Performance and Contrarian Appeal

Despite the recent volatility, QSP.UN’s long-term fundamentals remain compelling. The company’s 24% ROE, significantly above the 10% industry average, reflects its ability to generate value through efficient capital allocation and strategic leverage [3]. This high ROE is partly fueled by a debt-to-equity ratio of 2.67, which, while elevated, has historically supported growth in system-wide sales and margin expansion [3]. For value investors, the current 11% decline may be an overreaction to near-term challenges, such as Popeyes’ 1.4% same-store sales decline in Q2 2025, rather than a reflection of the company’s long-term trajectory [5].

Dividend Strength and Total Returns

Dividends have historically played a critical role in QSP.UN’s total returns. While the stock’s price performance has lagged in Q3 2025, its dividend yield of 2.8% (as of August 2025) provides a buffer against volatility [1]. Over the past five years, dividends have contributed approximately 40% of the total shareholder return, underscoring their importance in outperforming price-driven metrics [3]. This dual focus on earnings growth and shareholder returns aligns with contrarian strategies that prioritize cash flow and reinvestment potential.

Short-Term Challenges and Risks

The Q2 2025 earnings report, which missed EPS estimates by $0.03, triggered a 5.98% pre-market drop and contributed to the Q3 selloff [2]. However, the company’s revenue of $2.41 billion exceeded expectations, and organic adjusted operating income grew by 5.7% year-over-year [2]. Analysts have downgraded QSP.UN to “hold” due to concerns about rising beef prices and weak comparable sales at Popeyes, but these risks are largely external and do not negate the company’s structural strengths [4].

Strategic Catalysts for Recovery

RBI’s long-term roadmap includes 400 restaurant remodels in 2025, international expansion, and refranchising initiatives, all of which are expected to drive margin improvements and sales growth [2]. The company’s international segment, which grew system-wide sales by 9.8% in Q2 2025, remains a key growth engine [2]. Additionally, its commitment to maintaining an 8%+ organic adjusted operating income growth target for 2025 suggests confidence in its ability to navigate headwinds [5].

Conclusion: A Contrarian Buy?

For investors with a 3–5 year horizon, QSP.UN’s 11% decline may present a buying opportunity. The company’s 24% ROE, 6.2% EPS growth, and dividend resilience demonstrate its capacity to generate value despite short-term volatility. While debt risks and sector-specific challenges persist, RBI’s strategic initiatives and historical outperformance position it as a compelling contrarian play. As the market overreacts to near-term noise, patient investors may find themselves rewarded by the company’s long-term execution.

Source:
[1] Restaurant Brands International Inc. (QSR) Stock Historical [https://finance.yahoo.com/quote/QSR/history/]
[2] Restaurant Brands International Inc. Reports Second Quarter 2025 Results [https://www.rbi.com/English/news/news-details/2025/Restaurant-Brands-International-Inc--Reports-Second-Quarter-2025-Results/default.aspx]
[3] Is Restaurant Brands International Limited Partnership ... [https://simplywall.st/stocks/ca/consumer-services/tsx-qsp.un/restaurant-brands-international-limited-partnership-shares/news/is-restaurant-brands-international-limited-partnership-tseqs-5]
[4] Argus Downgrades Restaurant Brands International (NYSE ... [https://www.marketbeat.com/instant-alerts/argus-downgrades-restaurant-brands-international-nyseqsr-to-hold-2025-08-15/]
[5] Restaurant Brands International (QSR) Q2 2025 earnings [https://www.cnbc.com/2025/08/07/restaurant-brands-international-qsr-q2-2025-earnings.html]