MTY Food Group (TSX:MTY) is a Montreal-based franchisor and operator of more than 70 brand names in the restaurant industry. Its brand span casual dining, fast casual, and quick-service restaurants.
Shares of MTY Food have plunged 16.3% over the past month as of close on November 8. The company released record sales in the third quarter, but it still missed analyst estimates which sent the stock into a tailspin.
Quarterly system sales reached $1 billion for the first time in the company’s history in Q3 2019. EBITDA also hit a record high of $41.8 million, up 8% from the prior year. MTY Food acquired Allô! Mon Coco and Yuzi Sushi in July. In early October it entered into an agreement to acquire Turtle Jack’s Muskoka Grill, COOP Wicked Chicken and Frat’s Cucina.
The restaurant industry is one to consider as the domestic and international economy slows into the New Year. MTY Food has been powered by its acquisitions, but restaurant stocks are a solid defensive option in a choppy environment. More so when they are diversified and undervalued like this company and stock is today.
Shares of MTY Food still possess a price-to-earnings ratio of 19.3 and a price-to-book value of 2. The stock had an RSI of 31 at the time of this writing, putting MTY Food just outside of technically oversold territory.
It is still trading close to its 52-week lows, and this post-earnings dip looks like a promising buy signal.
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