Download PDF

1. Company Snapshot

1.a. Company Description

MTY Food Group Inc.franchises and operates quick-service, fast-casual, and casual dining restaurants in Canada, the United States, and internationally.The company also sells retail products under a multitude of banners.


As of November 30, 2021, the company had 6,719 locations comprising 6,603 franchised, 23 joint ventures, and 93 corporate locations.The company was formerly known as iNsu Innovations Group Inc.and changed its name to MTY Food Group Inc.


in July 2003.MTY Food Group Inc.was founded in 1979 and is headquartered in Saint-Laurent, Canada.

Show Full description

1.b. Last Insights on MTY

MTY Food Group's recent momentum is driven by a 12% dividend hike, signaling management's confidence in the business. This increase underscores the company's commitment to returning cash to shareholders. A conference call to discuss Q4 and year-end results is scheduled, which may provide insight into the company's financial health. Institutional ownership is relatively low at 23%, with retail investors holding a significant 60% stake, indicating a diverse shareholder base.

1.c. Company Highlights

2. MTY Food Group's Q4 2025 Earnings: A Strong Finish to a Challenging Year

MTY Food Group reported a net income attributable to owners of $32.1 million or $1.40 per diluted share, a significant increase from the prior period. The company's normalized adjusted EBITDA came in at $87.7 million for the fourth quarter, up 48% year-over-year, primarily due to a $29.5 million gift card breakage income. Revenue growth was driven by the Food Processing Distribution and Retail segment, which delivered a 27% increase, driven by a shift in the retail model from a licensing agreement to vendor on record. EPS came in at $1.40, beating estimates of $0.79.

Publication Date: Mar -02

📋 Highlights
  • Positive Net Unit Growth:: Added 19 locations in Q4, achieving annual net unit growth for the first time since 2013.
  • Free Cash Flow Record:: Free cash flow per share net of lease payments reached $5.68, marking the strongest two-year performance in MTY's history.
  • EBITDA Surge:: Normalized adjusted EBITDA jumped 48% to $87.7M, driven by $29.5M in gift card breakage income; U.S. franchise operations declined 12% excluding this impact.
  • Same-Store Sales Decline:: Q4 same-store sales fell 1.7% (-2.8% in the U.S.), but U.S. digital sales rose 6% excluding Papa Murphy's drag.
  • Food Processing Growth:: Revenue in the Food Processing segment surged 27% with stable 11% profit margins due to a retail model shift.

Segment Performance

The franchise operations segment profit improved by 53% in Q4, primarily due to gift card breakage income. Excluding this impact, franchise operations in Canada remained flat, while the U.S. declined by 12%. The Corporate Store segment delivered a segment profit of $7.9 million, up 23% year-over-year, with margins improving to 7% compared to 5% in the same period last year.

Operational Highlights

MTY Food Group added 19 locations in Q4, pushing the company into positive territory on an annual basis for the first time since 2013. Same-store sales declined by 1.7% in Q4, with Canada flat and the U.S. down 2.8%. The company continues to invest in long-term initiatives such as data science, omnichannel experience, and continuous brand improvements.

Valuation and Outlook

With a P/E Ratio of 7.95 and an EV/EBITDA of 8.34, the stock appears to be reasonably valued. The company's dividend yield of 3.29% and free cash flow yield of 17.74% are also attractive. Analysts estimate revenue growth of 0.8% for next year, indicating a stable outlook. As Eric Lefebvre mentioned, "We expect franchisee EBITDA growth to outpace same-store sales growth," which should drive long-term value creation.

Conclusion on Financial Health

The company's asset-light and well-diversified business model continues to generate strong free cash flows, providing significant optionality to reduce debt, invest for the future, and return capital to shareholders. With a Net Debt / EBITDA ratio of 5.08 and an ROE of 14.51%, MTY Food Group's financial health remains robust.

3. NewsRoom

Card image cap

Toast Announces Fourth Quarter and Full Year 2025 Financial Results

Feb -12

Source:

Card image cap

MTY Food Group Inc Will Hold a Conference Call to Discuss its 2025 Fourth Quarter and Year End Results

Feb -12

Source:

Card image cap

A Look At MTY Food Group (TSX:MTY) Valuation After Dividend Hike And Top Pick Recognition

Jan -30

Source:

Card image cap

How MTY Food Group’s 12% Dividend Hike Will Impact MTY Food Group (TSX:MTY) Investors

Jan -27

Source:

Card image cap

MTY Increases Its Quarterly Dividend by 12%

Jan -21

Source:

Card image cap

While institutions own 23% of MTY Food Group Inc. (TSE:MTY), retail investors are its largest shareholders with 60% ownership

Dec -11

Source:

Card image cap

Are Investors Undervaluing MTY Food Group Inc. (TSE:MTY) By 41%?

Nov -27

Source:

Card image cap

Papa Murphy’s parent company under strategic review

Nov -18

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (-1.31%)

6. Segments

Corporate Stores

Expected Growth: -2%

Decline in corporate stores for MTY Food Group Inc. is driven by increased competition, cannibalization from own brands, and declining same-store sales. Additionally, high labor costs, menu pricing pressures, and inefficient store operations contribute to the -2% growth rate.

Franchising

Expected Growth: -1%

MTY Food Group Inc.'s franchising growth decline of -1% is driven by increased competition in the QSR industry, cannibalization of sales from existing locations, and high royalty fees. Additionally, rising labor costs, food inflation, and declining consumer spending power have negatively impacted franchisee profitability, leading to a decrease in new franchise openings and existing location closures.

Processing, Distribution and Retail

Expected Growth: -1%

MTY Food Group Inc.'s -1% growth is driven by declining same-store sales in Processing (-2%) due to reduced demand from foodservice clients, Distribution (-1.5%) affected by supply chain disruptions, and Retail (-0.5%) impacted by intense competition and changing consumer preferences.

Promotional Funds

Expected Growth: 0%

MTY Food Group Inc.'s Promotional Funds growth is stagnant at 0%. This is likely due to intense competition in the quick-service restaurant industry, limited marketing budget allocation, and ineffective promotional strategies. Additionally, changing consumer preferences and behavior may have also contributed to the lack of growth.

Intercompany

Expected Growth: 0%

No growth in intercompany sales from MTY Food Group Inc. is attributed to lack of diversification, stagnant market share, and absence of innovative products or services, resulting in flat revenue.

7. Detailed Products

Casual Dining

MTY Food Group Inc. offers a range of casual dining restaurants that provide a relaxed atmosphere and a variety of menu options.

Quick Service

MTY Food Group Inc. operates quick service restaurants that offer convenient and affordable meals on-the-go.

Franchising

MTY Food Group Inc. offers franchising opportunities for entrepreneurs to own and operate their own restaurants.

Food Processing

MTY Food Group Inc. provides food processing services, including meat processing and bakery products.

Cafeterias and Institutional Food Services

MTY Food Group Inc. offers cafeteria and institutional food services to businesses, schools, and other institutions.

Retail

MTY Food Group Inc. operates retail stores that offer a range of food products and services.

8. MTY Food Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

MTY Food Group Inc. operates in the quick-service restaurant industry, where substitutes are readily available. However, the company's diverse brand portfolio and strong brand recognition mitigate the threat of substitutes.

Bargaining Power Of Customers

MTY Food Group Inc. has a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's brands are well-established, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

MTY Food Group Inc. relies on a network of suppliers for ingredients and materials. While the company has some bargaining power due to its size, suppliers can still exert some pressure on prices and quality.

Threat Of New Entrants

The quick-service restaurant industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants and allows MTY Food Group Inc. to maintain its market position.

Intensity Of Rivalry

The quick-service restaurant industry is highly competitive, with many established players competing for market share. MTY Food Group Inc. faces intense rivalry from competitors, which can lead to pricing pressure and marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 52.02%
Debt Cost 5.13%
Equity Weight 47.98%
Equity Cost 13.82%
WACC 9.30%
Leverage 108.43%

11. Quality Control: MTY Food Group Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Nathan's Famous

A-Score: 6.8/10

Value: 5.5

Growth: 6.6

Quality: 7.0

Yield: 7.0

Momentum: 7.5

Volatility: 7.0

1-Year Total Return ->

View Full Report
Stock-Card
MTY Food Group

A-Score: 5.4/10

Value: 7.0

Growth: 6.1

Quality: 4.2

Yield: 6.0

Momentum: 2.5

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
Dine Brands

A-Score: 5.3/10

Value: 7.5

Growth: 3.3

Quality: 5.0

Yield: 9.0

Momentum: 3.0

Volatility: 4.3

1-Year Total Return ->

View Full Report
Stock-Card
FAT Brands

A-Score: 5.0/10

Value: 10.0

Growth: 3.3

Quality: 5.1

Yield: 10.0

Momentum: 0.0

Volatility: 1.3

1-Year Total Return ->

View Full Report
Stock-Card
Papa John's

A-Score: 4.8/10

Value: 6.0

Growth: 4.6

Quality: 4.7

Yield: 6.0

Momentum: 3.5

Volatility: 4.0

1-Year Total Return ->

View Full Report
Stock-Card
El Pollo Loco

A-Score: 4.5/10

Value: 5.8

Growth: 4.7

Quality: 4.4

Yield: 3.0

Momentum: 3.0

Volatility: 6.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

40.41$

Current Price

40.41$

Potential

-0.00%

Expected Cash-Flows