- MTY Food Group (TSX:MTY), one of the largest franchisors in the North American restaurant industry, has been approved by the TSX to renew its stock buyback or normal course issuer bid
- The company’s stock looks attractive thanks to its depressed price, brand power and profitable operations
- MTY is a global restaurant franchisor and operator with a presence across more than 7,000 locations, 40 countries and 90 brands including Thai Express, Mucho Burrito, Mr. Sub, Pinkberry and Cold Stone Creamery
- MTY Food Group stock has given back 25.58% year-over-year and 33.14% since 2019
MTY Food Group (TSX:MTY), one of the largest franchisors in the North American restaurant industry, has been approved by the TSX to renew its stock buyback or normal course issuer bid.
The company may purchase for cancellation up to 1,196,513 common shares between Wednesday and July 2, 2025, representing about 5 per cent of outstanding common shares. This overall total is limited to a maximum of 11,450 shares per day, which is equivalent to the average daily trading volume for MTY on the TSX during the six-month period ended May 31, 2024.
Under its previous normal course issuer bid (July 3, 2023, to July 2, 2024), MTY purchased 498,000 common shares of an authorized 1,220,673 at a weighted average price of C$48.41 per share.
According to Friday’s news release, the company’s purchases, if any, will be guided by market conditions and whether the stock price undervalues operations enough to make an investment a sound capital allocation strategy.
Is MTY Food Group undervalued?
While your full due diligence process should follow any insight that leads you to consider an investment, MTY Food Group does offer numerous reasons to justify a stock buyback at the present moment, as well as conviction over the long term. Here are three to consider:
Firstly, the company has been consistently profitable over the past five years, except in 2020 when COVID reared its head, pulling in about C$80 million in net income per year, while the stock has proceeded to give back more than 33% over the period, signalling that the broader market is being too cautious about the effect of short-term inflationary pressures and unknowns such as COVID on otherwise ironclad operations.
Secondly, MTY Food Group owns a diversified portfolio of more than 90 brands across North America (32% Canada, 65% U.S.) and internationally (3%) that will attract customers in good times and bad, and insulate the company from idiosyncratic economic environments, granting it stability compared with more concentrated or pure-play competitors.
Lastly, the company has made more than 50 acquisitions since 1999, and benefits from C$50.6 million in cash, cash flowing operations, and about C$350 million in revolving credit to build on its track record of inorganic growth and operational enhancements as opportunities present themselves.
Continue your due diligence by reading MTY Food Group’s latest investor presentation.
About MTY Food Group
MTY is a global restaurant franchisor and operator with a presence across more than 7,000 locations, 40 countries and 90 brands including Thai Express, Mucho Burrito, Mr. Sub, Pinkberry and Cold Stone Creamery.
MTY Food Group stock (TSX:MTY) last traded at C$43.70 per share. The stock has given back 25.58% year-over-year and 33.14% since 2019.
Join the discussion: Find out what everybody’s saying about this restaurant stock on the MTY Food Group Inc. Bullboard, and check out Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
(Top image: MTY Food Group)
