Tim Hortons Inc. (THI) recently reported second-quarter earnings per share that were about 3% above the Zacks Consensus Estimate. Total revenues jumped 9% year-over-year. The company also declared a dividend of 10 cents per share, which translates into an industry-leading yield of 1.4%.
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.
Solid Results
The company recently reported 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 is payable on September 1 to stockholders of record as of August 18.
Bullish Forecasts
The company’s strong second quarter led to higher Zacks Consensus Estimates. The current year forecast of $1.66 per share is above last month’s $1.58. For 2010, the Zacks Consensus Estimate of $1.85 was increased from $1.76 over the past month.
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 2.5%. THI’s earnings are projected to grow 15% over the next 3 – 5 years, versus an industry average of 14%.
