Earnings Preview: Tim Horton's

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Tim Horton's (NYSE: THI) is set to report their earnings on Nov. 8.  A lot of good things have been going on for this company since they went public a few years ago.  What are some things that we can look forward to in their next earnings report?  I've been reading over their information from last quarter and have singled out a few things that I'll be watching for.

New Locations

As of the 2nd quarter, Tim Horton's had opened 22 new locations in the United States, and 41 in Canada.  They have a stated goal for 80-100 new locations in the United States before the end of this year.  To hit the low end of this goal, they need 58 more, and I'm hoping that they get a good chunk of that this quarter.  I would like to see around 25 for the quarter.  In Canada they are hoping for 160-180.  That leaves 119 more to hit the low end of that goal.  I would like to see at least 50 for the quarter.

In another article that I wrote about Tim Horton's, I talked about how they have a deal to open up new locations in the Middle East.  They are expecting to open 120 locations in the next 5 years.  This international growth started in the 2nd quarter, with their very first 5 international locations.  For the year, they are hoping to open 15.  So, I'll be looking to see if they can open up another 5 or so in this quarter.

Continued Revenue Growth

Tim Horton's runs a tight ship, and are very proud of consistently being able to grow same-store sales and revenue.  This quarter, they've rolled out some new things in hopes of boosting revenues even further.  They are trying to tap the lunch and dinner markets with offerings like paninis and lasagna.  I'm interested to see if they can successfully pull off this kind of "re-branding."  Will people begin to think Tim Horton's for hot sandwiches in addition to hot coffee?

THI Revenue Quarterly data by YCharts

Tim Horton's knows how to grow revenues.  In the last 6 quarters they've been able to out pace Starbucks (NASDAQ: SBUX) and handily outperform Caribou (NASDAQ: CBOU).  Management is clearly excited with the revenue growth opportunities the menu items will provide.  I'll be looking to see how big of a revenue boost they actually bring. 

Bonus

For an added bonus, I'm curious what free wi-fi will do for this business.  Tim Horton's has been putting forth a decent amount of effort to get free wi-fi installed throughout their chain.  They already have it set up in 1,100 stores in Canada.  But for the year they are hoping for more.  "By the end of the year, we expect that approximately 2,000 of the restaurants in our Canadian system will have Wi-Fi, creating the country's largest free Wi-Fi network."  

Ok, being Canada's largest free wi-fi network is kind of cool.  I appreciate the service that they are rolling out for their guests.  But can we investors hope to get anything out of this as well?  According to statements from management, this doesn't seem to be a money making move.  Tim's CFO said "...we see it as just another way of really making the inside of the restaurant more inviting and comfortable for our guests."  So it might not be directly a money making move, but a more inviting restaurant may boost same store sales.  Like I said, I'm more curious than anything to see what they have to say about how the free wi-fi has helped them meet their goals.

November 8th

Mark your calenders.  I'm really excited to see what Tim Horton's has to share with us from the 3rd quarter.  They are general very consistent, very healthy, and full of steady growth.  So long as these things keep happening, I feel very good about their future as an investment.


thequast has no positions in the stocks mentioned above. The Motley Fool owns shares of Starbucks and has the following options: short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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