Tim Hortons Inc. will be reporting its fourth quarter results on Thursday, and at least one analyst is forecasting some solid numbers and a dividend increase.
Irene Nattel, with RBC Capital Markets, expects a 10% increase in divdend payouts to 44 cents a share, about 25% of the company's 2009 earnings-per-share rate of $1.76.
"Historical evidence confirms that companies that pay rising dividends consistently outperform those that pay stable or no dividends," Ms. Nattel said in a note to clients.
Also, Tim Hortons is expected to launch a stock repurchase program in March, worth about $200-million.
"Tim Hortons has a strong record of acting upon its buy-back," she said. The company is currently on track to repurchase about 5.7 million shares, worth $172-million before March.
As for the results, Ms. Nattel expects same-store sales to strengthen to 3% from 2.7% over the first nine months of the year on price increases and unseasonably warm weather in Ontario.
Revenues are forecast at $616.4-million, up 9% compared with 2008. Earnings-per-share of 51 cents is a 10% increase on 2008 and in line with consensus.
RBC has a rating of Outperform – average risk and a price target of $38 for Tim Hortons.