Restaurant Brands' record half-year profit has been met with mixed reaction from analysts as the fast food operator grapples with Covid lockdown in New Zealand.
The owner of KFC, Pizza Hut, Carl's Jr, and Taco Bell restaurants in New Zealand, Australia, Hawaii, and California last week reported a 208 per cent jump in profit for the half-year to June 30, 2021.
The company, majority owned by Mexico's Finaccess Capital but still listed on the NZX, recorded net profit of $34.5m, up from the previous same period's $11.2m. Group sales rose 41 per cent to $540.6m.
In a research note following the result, Jarden changed its rating to "underweight" from "neutral" based on a "valuation disconnect" between the broker's assessment of fundamental value and current market pricing.
Restaurant Brands shares recently traded at $16, having risen 33 per cent over the past 12 months.
Jarden raised its target price to $14 from $12.30.
"While we continue to view RBD as a good business with attractive medium-term organic and bolt-on M&A growth, we believe this upside is more than factored into the current share price," Jarden analyst Andrew Steele wrote.
Jarden has revised its forecast for Restaurant Brands' full-year underlying earnings by 9 per cent, citing New Zealand's return to alert level 4 lockdown more than two weeks ago.
But Forsyth Barr maintained its current neutral rating following the result, which was in line with expectations.
Analysts Guy Hooper and Scott Anderson noted positive same-store sales growth across all regions.
"RBD is now trading on a 12 month forward price to earnings (PE) ratio of 28 times, in line with international peers," they said.
"Although trading towards the top end of fair value, in our opinion, we retain a Neutral rating recognising 1) store growth targets across its markets and 2) a strong track record of performance."
They noted strong sales growth was led by KFC, with Carl's Jr. also providing a positive contribution as delivery uptake continues.
"Whilst the near-term outlook is tempered, RBD has outlined strong store roll out plans and continues to chip away at smaller store acquisitions. We lift our medium-to-longer term assumptions on the back of a faster than expected store growth runrate.
Restaurant Brands is planning to open four new Taco Bell and two KFC stores.
Total sales growth increased 37 per cent reflecting lost trading days in the prior comparable period.
Forsyth Barr has a target price of $15.