Restaurant Brands International Limited Partnership (QSP) stock intrinsic value fair value estimate & owner earnings analysis

WHAT THE SECURITY IS. These are the exchangeable units of Restaurant Brands International Limited Partnership (Toronto ticker QSP). Each unit is exchangeable one-for-one into a common share of Restaurant Brands International (RBI), so all values below are US dollars per RBI-share-equivalent. The units trade in Canadian dollars, so convert before comparing to a quote. RBI's 3G Capital-related holders own a large majority of the units. THE BUSINESS. RBI franchises Tim Hortons, Burger King, Popeyes and Firehouse Subs: 33,041 restaurants at the end of 2025, about $46.8 billion of system sales (up 5.3%). Most of the profit is royalty income from franchisees, so a restaurant opening or a sales gain flows to owners with little added capital. 2025 also included company-owned restaurants (mostly former Carrols Burger King units bought in 2024, being refranchised) and Burger King China, which was bought in February 2025 and is now reported as a discontinued operation (a $126M loss in 2025; a joint venture with CPE was agreed in November 2025). OWNER EARNINGS. We measure earnings as operating cash flow, less working-capital swings, less stock compensation, less the part of capex needed just to stay in place. Per exchangeable-unit equivalent this gave: 2017 $2.12, 2018 $2.61, 2019 $2.94, 2020 $2.03 (COVID), 2021 $2.82, 2022 $2.73, 2023 $2.59, 2024 $2.64, 2025 $3.08. 2017 is distorted by a US tax-reform accounting swing, so we ignore it. We anchor on the 2018-2025 median, about $2.70 per unit (about $1.2 billion in total), which includes the COVID trough and the Carrols/China era and so does not rely on 2025's strong $3.08, itself up 17% on 2024. Stock compensation ($151M in 2025) is charged in full. Capex has risen from about 1% to 2.8% of revenue as the company owns more restaurants, and we keep that cost in. Interest ($714M paid in 2025) is already deducted in cash flow; we do not subtract debt again, but about $13.3 billion of long-term debt is a real feature of the downside. BASE CASE, about $56 per unit. Year one is $2.78 (3% on the anchor, well below the 17% actual jump in 2025, so nothing here relies on that rate repeating). Growth credited is 3% a year for five years and 2.5% for the next five. Evidence: net restaurant growth of 2.9% in 2025 and 3.4% in 2024 and consistent unit growth through the 2020 downturn, funded from the franchisor's own cash flow, with each new restaurant paying a contractual royalty. We stop at 3% even though system sales grew 5.3%, because owner earnings per unit have only compounded about 2-3% since 2018 as stock compensation and capex rose. Left out: Burger King US turnaround margin gains (Reclaim the Flame, up to $700M of spending through 2028 has no result yet), China and other new-market upside, and Carrols refranchising proceeds. After year ten we hold earnings flat rather than growing them: royalty streams under long-dated franchise agreements at brands that are decades old are the named persistence, and no further growth is credited. BEAR CASE, about $30. Owner earnings settle at about $2.10, near the 2020 trough of $2.03, and never grow for ten years, then erode 2% a year. Named risks: Burger King US, the largest brand, has comparable sales of only +1.6% and net restaurant count down 0.8% in 2025 and Popeyes comparable sales fell 3.2% (US -2.9%); heavier spending on the Burger King plan and on company-owned restaurants; and $13.3 billion of debt that leaves little room if cash flow falls. BULL CASE, about $70. Owner earnings start at $2.95 and grow 4.5% a year for ten years, then stay flat. This uses the brands' own levers: 5%+ system sales growth already reported in both 2024 and 2025, international net restaurant growth of 4.9% and Firehouse Subs unit growth of 7.7%, with royalties compounding on that base. It does not assume a Burger King US recovery or China profits. WHAT COULD MAKE THIS WRONG. A permanent erosion in Burger King US or Tim Hortons Canada traffic (Canada comparable sales +2.8% in 2025 is currently fine), a larger or longer investment programme than $700M, or losses in China that require more funding (about $147M was provided to Burger King China in 2025). We did not find any going-concern language. We reviewed annual filings through fiscal 2025 and did not reconcile the second-quarter 2026 report, so recent-quarter trends are not in the growth path. MARGIN-OF-SAFETY PRICE. About $35 (US dollars) per unit: roughly 37% below our base case and modestly above the bear case, reflecting a stable but heavily indebted franchisor with a concentrated controlling holder.