Challenges in the Menu
Restaurant Brands International Inc. (NYSE: QSR), a significant holding in the Pershing Square Capital portfolio managed by Bill Ackman, recently unveiled second-quarter results, painting a mixed picture for investors.
Despite representing 8.5% of Ackman’s fund and clinching the title of the third-largest holding, Restaurant Brands has been facing turbulent times. The stock comprises a hefty 16.49% of Pershing Square’s portfolio, a testament to Ackman’s confidence in the fast-food conglomerate.
While the latest earnings report on August 8 showcased a revenue beat fueled by the success of Canadian coffee chain Tim Hortons, the company finds itself in a quagmire, unable to translate this growth into positive market sentiment.
CEO Josh Kobza, in a bid to assuage investor concerns, noted the firm’s outperformance against major rivals in its primary markets. However, these reassurances seem to have fallen on deaf ears as the stock struggles to gain traction.
The Inglorious Performance
Despite Tim Hortons’ commendable display and favorable international expansion, Restaurant Brands International’s stock paints a dismal picture. With a 2.54% dip over the past year and a troubling 6.92% decline year-to-date, shareholders are bracing for a rough ride.
Technical Turbulence
Technically speaking, Restaurant Brands International’s outlook is marred by bearish signals. The current share price of $70 languishes beneath the five-, 20-, and 50-day exponential moving averages, spelling out a gloomy trend with minor sell-offs.
Key indicators like the eight-day simple moving average at $70.52, the 20-day SMA at $70.89, and the 50-day SMA at $70.17 all hint at bearish undertones. The ominous 200-day SMA at $73.32 only adds to the pessimistic narrative.
The Road Ahead
With the stock on a downward spiral and technical indicators flashing warning signs, Bill Ackman might need more than Tim Hortons’ success to steer his third-largest holding out of troubled waters. Investors are advised to fasten their seatbelts for a turbulent journey ahead.
