Why THI’s shares didn’t change after the earnings release in 3Q14

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Shares didn’t change

Tim Hortons (THI) reported its earnings before the market opened on November 5. Shares started trading at $80.59. This was flat from the previous day’s closing of $80.57. The day’s high and low were $81.50 and $80.54, respectively.

The share volume was ~0.9 million shares—compared to the 90-day average daily volume of ~1.1 million shares. According to NASDAQ, THI closed ~1% up at $81.18 from previous day’s close.

THI Daily Stock Movement 2014-11-22

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THI had solid same-store sales performance in the US and Canada. It also added 44 new restaurants in the system. These are indicators for investors to remain invested in the stock. Also, the US economy is improving. This is positive for the restaurant industry as a whole. Read “Why most key restaurant industry indicators are on the upswing” to learn more.

Upgrades and downgrades

  • On November 5, BMO Capital Markets maintained its “market perform” rating with a target price of $83.88.
  • On November 6, Barclays also maintained its “equal weight” rating with a target price of $79.53. However, Barclays lowered the rating from its previous target of $82.39.
  • As of November, one analyst had a buy rating on the company, 15 had a hold rating, and one had a sell rating with a consensus target price of $81.50.

4Q14 estimates

Wall Street analysts’ consensus estimates for THI in 4Q14 are as follows:

  • Adjusted earnings per share are estimated to be at $0.88
  • Revenues are estimated to be at $943 million
  • Operating profits are estimated to be at $197 million
  • Adjusted net income is estimated to be at $118 million
  • Fourth quarter earnings should be announced on February 20, 2015

In the next part of this series, we’ll review THI’s YTD returns. We’ll compare THI’s returns with its competitors’ returns. Other restaurant companies include Starbucks (SBUX), Yum! Brands Inc. (YUM), and Dunkin’ Donuts (DNKN). All of these companies are part of the Consumer Discretionary Select Sector SPDR Fund (XLY).

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