Tim Hortons Inc. (THI) has done well against the market over the past year. The company also continues to lead the industry with strong fundamentals. For example, its ROE of 24% more than doubles the industry average of 10%.

Company Description

Tim Hortons is the fourth largest publicly-traded quick service restaurant chain in North America based on market capitalization, and the largest in Canada. Its offerings include premium coffee, flavored cappuccinos, specialty teas, home-style soups, fresh sandwiches, donuts and fresh baked goods. As of June 28, 2009, Tim Hortons operated 3,475 systemwide restaurants, including 2,939 in Canada and 536 in the United States.

Strong Fundamentals

Tim Hortons offers a return on equity (ROE) of 24%, more than doubling the industry average of 10%. The company’s net profit margin of 14% soars past the industry average of 2%. THI’s earnings are projected to grow 15% over the next 3 – 5 years, which is in line with the industry average.

Bullish Forecasts

The company saw a strong second quarter, which led to higher Zacks Consensus Estimates. The current year forecast of $1.66 per share is above the 2 months-ago level of $1.58. For 2010, the Zacks Consensus Estimate of $1.85 was increased from $1.76 over the past 2 months.

Solid Results

The company reported stellar second-quarter results, including earnings per share that were about 3% above the Zacks Consensus Estimate.

Management highlighted several positives despite second-quarter challenges. Tim Hortons saw growth in transactions in its Canadian business as well as operational and earnings improvement in its U.S. business.

Total revenues of $556.1 increased 9% year-over-year. Same-store sales grew 2% from the year-prior in Canada and increased by 3% in the U.S.

Same-store sales benefited from the launch of Chicken Wrap Snackers and the introduction of Iced Coffee in the Canadian market. Also, helping drive sales was the attractive price point of the sausage and a biscuit product in the U.S.

The company also declared a quarterly dividend of 10 cents per share, which translates into an industry-leading yield of 1.4%. The dividend was paid out on September 1. Zacks Investment Research