Canada's Diversified Royalty Q4 adjusted revenue rises 11%

Overview

• Canada multi-royalty firm's Q4 adjusted revenue rose 11% yr/yr

• Distributable cash for Q4 increased 8% yr/yr

• AIR MILES royalty income declined, but new fixed royalty terms were announced for 2026

Outlook

• Company to receive fixed annual AIR MILES® royalty of $3.9 mln, growing 2.42% per year, effective Feb 2026

• Stratus royalty increases 5% annually until Nov 2026, then 4% per year thereafter

• BarBurrito royalty grows 4% per year until March 2030; Cheba Hut royalty rises at least 3.5% annually

Result Drivers

• CHEBA HUT ACQUISITION - Incremental revenue from Cheba Hut contributed to adjusted revenue growth

• MR. LUBE + TIRES GROWTH - Strong same-store sales growth at Mr. Lube + Tires driven by higher tire and maintenance sales

• AIR MILES WEAKNESS - Lower royalty income from AIR MILES due to continued softness in the rewards program

Company press release: ID:nGNX73P1XK

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 4 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the entertainment production peer group is "buy"

• Wall Street's median 12-month price target for Diversified Royalty Corp is C$4.50, about 13.4% above its March 19 closing price of C$3.97

• The stock recently traded at 18 times the next 12-month earnings vs. a P/E of 16 three months ago

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