Tim Hortons’ YTD returns
As of November 2014, Tim Hortons’ (THI) year-to-date (or YTD) returns were 54.3%. The S&P 500 had returns of 10.9%. The restaurant industry had returns of 9.1%—as you can see in the following chart.
It’s important to note that most of the increase in THI’s shares came from the announcement that Burger King (BKW) acquired the company. To learn more, read our series “Burger King and Tim Hortons’ investors react to acquisition news.”
Tim Hortons’ comp analysis
THI operates restaurants in a cafe format. You can learn more about different restaurant concepts in “Must-know: Why restaurants are so important to investors.”
In the above chart, restaurants had a YTD return of 9.1%. The best YTD returns came from Tim Hortons. Without THI, the average YTD returns were just 0.4% for the restaurants listed above. McDonald’s (MCD) has the largest market cap among the restaurant players. It had a return of -5.8%. Wendy’s (WEN) had a return of -0.3%.
In contrast, if you invested in a broader portfolio—like the Vanguard Total Stock Market (VTI)—you would get a YTD return on investment of 9.9%. VTI includes some of the restaurants listed above.
For THI, the next 12 months’ (or NTM) price-to-earnings ratio (or PE) is lower than the last 12 months’ (or LTM) PE. This means that analysts are expecting an increase in earnings per share (or EPS) for THI.
In the above chart, we can compare THI with six of its competitors. The average PE for the LTM—calculated as the price per share over the LTM EPS—was 29.2x. The NTM PE was 23.6. It’s calculated using Wall Street analysts’ NTM EPS estimates in the denominator. This indicates expected EPS growth in the above group of stocks.
THI’s PE is above average. This indicates that the stock is overvalued compared to its peers.
At Market Realist, we understand how companies performed compared to their previous results and their peers. We publish earnings overviews every quarter.
To read more about other restaurants, visit Market Realist’s Restaurants page.