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The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Restaurant Brands International Limited Partnership (TSE:QSP.UN). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
See our latest analysis for Restaurant Brands International Limited Partnership
How Quickly Is Restaurant Brands International Limited Partnership Increasing Earnings Per Share?
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. It certainly is nice to see that Restaurant Brands International Limited Partnership has managed to grow EPS by 34% per year over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Restaurant Brands International Limited Partnership remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.9% to US$7.2b. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Restaurant Brands International Limited Partnership's balance sheet strength, before getting too excited.
Are Restaurant Brands International Limited Partnership Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a CA$32b company like Restaurant Brands International Limited Partnership. But we do take comfort from the fact that they are investors in the company. Notably, they have an enviable stake in the company, worth US$374m. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.