Canada's MTY Food beats Q4 revenue estimates, swings to profit

Overview

• Canada restaurant franchisor's Q4 revenue rose, beating analyst expectations

• Net income for Q4 improved significantly, reversing a loss from previous year

• Company initiated strategic review process to enhance shareholder value

Outlook

• MTY anticipates improvement in store openings pace in upcoming quarters

• Company expects stability in normalized adjusted EBITDA margins across segments

• MTY sees strong free cash flows into 2026, supported by lower capex

Result Drivers

• GIFT CARD BREAKAGE - Segment profits and normalized adjusted EBITDA increased due to a one-time catch-up of gift card breakage income on unutilized gift cards

• STORE OPENINGS - Net store openings of 19 locations contributed to positive growth, ending the year with 7,080 locations

• FOREIGN EXCHANGE IMPACT - System sales increase partly due to positive foreign exchange fluctuations

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 4 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the restaurants & bars peer group is "buy."

• Wall Street's median 12-month price target for MTY Food Group Inc is C$43.50, about 4.1% above its February 18 closing price of C$41.80

• The stock recently traded at 10 times the next 12-month earnings vs. a P/E of 8 three months ago

Press Release: ID:nGNXHRDjq

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.