Tim Hortons, Inc. (THI) recently hit a new multi-year high at $37.67 after rallying with the market in September. With a bullish next-year estimate and strong industry rank, this Zacks #1 rank stock is a picture of momentum.
Company Description
Tim Horton’s, Inc. operates quick service restaurants that specialize in coffee and doughnuts in the United States and Canada. The company was founded in 1964 and has a market cap of $6.41 billion.
Although THI has been trending higher for most of the last 18 months, shares took a big jump on Aug 12 after the company reported strong Q2 results that once again beat expectations.
Second-Quarter Results
Revenue for the period was up 6% from last year to $640 million. Earnings also came in strong at 52 cents, 6% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 6.66% over the last three quarters.
Canada was a bright spot for the company, with same-store sales up 6.4% from last year, its best performance in several quarters. The company’s business in the United States was strong too, where same-store sales were up a very solid 3.1%.
Solid Balance Sheet
Tim Horton’s balance sheet also strengthened from last year, with cash and equivalents up $28 million to $207 million while its total debt showed a marginal gain of $9 million to $415 million. It’s debt-to-equity ratio of 24% is well below its peer average of 43%.
Estimates
We haven’t seen much movement in estimates over the last few months, with the current year pegged at $1.98 and the next-year estimate pegged at $2.22, a solid 12% growth projection.
In light of recent gains of the last few months, THI trades with a forward P/E of 19X, a slight premium to its peer average of 16X.
2-Year Chart
On the chart, shares have been trending higher for most of the last 18 months, recently hitting a new multi-year high at $37.67. The stochastic below the chart is signaling that shares are trading safely away from over-bought territory, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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