Canada's beloved coffee-and-donuts chain, Tim Hortons
What analysts say:
- Buy, sell, or waffle? Seven analysts follow Tim Hortons. Three recommend a purchase, while the other four have a hold rating on the stock.
- Revenue. Analysts are forecasting CAD 412.1 million in revenue, just a 1.3% increase from the prior year.
- Earnings. The average forecast calls for earnings of $0.34, flat from the $0.35 earned a year earlier.
What management says:
Tim Hortons had been operating independently from Wendy's
The company reiterated its expectations for the year: a same-store sales rise of 4%-5% in Canada and 6%-7% in the U.S.; 120-140 new restaurants in Canada, and 60-80 in the U.S.; and operating income growth of 10%.
What management does:
The year has gotten off to a good start. Same-store sales in Canada rose 6.3%, and 4% in the United States. Operating income grew more than 13%, surpassing the company's 10% goal. Operating margins have been expanding nicely, thanks partly to higher sales. The U.S. segment gave some relief to new franchises that were opened late last year. Next year should see a boost in margins, since that incentive may not be replicated.
4/2/2006 |
7/2/2006 |
10/1/2006 |
12/31/2006 |
4/1/2007 |
|
---|---|---|---|---|---|
Gross Margin |
27.8% |
27.8% |
27.8% |
27.6% |
27.5% |
Operating Margin |
21.7% |
21.9% |
22.1% |
23% |
23.3% |
Net Margin |
13.5% |
14.2% |
13% |
15.6% |
14.9% |
One Fool says:
Tim Hortons is well-known in Canada, evolving since its 1964 inception into the country's largest quick-service restaurant chain. Previously offering just donuts and coffee, its menu now includes premium coffee, flavored cappuccinos, specialty teas, homestyle soups, fresh sandwiches, and fresh-baked goods. However, while Tim Hortons seeks to expand in the U.S., it will find itself facing stiff competition from the likes of Starbucks
Starbucks is a Motley Fool Stock Advisor selection.
Fool contributor Lawrence Rothman is happy to receive feedback, and promises to read it when not being wrestled by his three children. He doesn't have any positions in the companies mentioned.