MTY Food Group Stock: How High Could it Go in 2023?

MTY Food Group Inc. (TSX:MTY) stock is trading close to its 52-week high, but it could still rise higher in 2023.

| More on:
grow dividends

Image source: Getty Images

MTY Food Group (TSX:MTY) is a Montreal-based company that franchises and operates quick-service, fast-casual, and casual dining restaurants in Canada, the United States, and internationally. It owns and operates familiar restaurant brands like O’Burger, KimChi, Mr. Sub, and SushiGo. Today, I want to explore how high this under-the-radar restaurant stock could rise in 2023. Let’s jump in.

How has MTY Food Group stock performed over the past year?

Shares of MTY Food Group have climbed 27% year over year as of close on February 3. The stock has jumped 24% so far in the new year. It is trading just shy of its 52-week high of $71.23. Investors who want to look closer at its recent performance can play with the interactive price chart below.

Should investors seek exposure to this market in 2023?

The restaurant industry faced enormous challenges during the COVID-19 pandemic that shook Canada and the rest of the world starting in early 2020. Many small businesses operating in this space failed to survive month after month of closures. However, there are restaurants that have proven resilient during the health crisis.

Restaurants have also experienced steady price inflation in this market. The Canada Food Price Report for 2023 predicted that food prices would rise between 5-7% for this year.

Polaris Market Research recently estimated that the global quick service restaurants (QSR) market was worth US$173 billion in 2021. The market researcher projects that this market will achieve a compound annual growth rate (CAGR) of 4.9% from 2022 through to 2030. That would bring its 2030 revenue to US$264 billion.

Does the company look strong ahead of its next earnings report?

Investors can expect to see MTY Food Group’s fourth-quarter and full-year fiscal 2022 results on February 15, 2023. In the third quarter (Q3) of 2022, the company reported total revenues of $171 million — up from $150 million in the third quarter of fiscal 2021. Meanwhile, revenues rose to $474 million for the first nine months of fiscal 2022 compared to $405 million for the previous year-to-date period.

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This measure aims to give a better picture of a company’s profitability. MTY Food Group delivered adjusted EBITDA of $132 million in the first nine months of fiscal 2022 — up from $125 million in the year-to-date period in fiscal 2021.

On December 8, 2022, the company announced the completion of its acquisition of Wetzel’s Pretzels. This chain of fast-food restaurants specializes in pretzels and hot dogs.

MTY Food Group: Should you look to ride the wave right now?

MTY Food Group stock currently possesses a favourable price-to-earnings ratio of 18. This restaurant stock is trading in more attractive value territory compared to most of its industry peers. In early January, the board of directors announced a quarterly dividend of $0.25 per share. That represents a modest 1.4% yield.

This company is geared up to deliver strong revenue growth going forward. Moreover, it is still trading in attractive value territory, even as it trades near a 52-week high. MTY Food Group still has room to run in 2023.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MTY Food Group. The Motley Fool has a disclosure policy.

More on Investing

Money growing in soil , Business success concept.
Investing

2 Great Dividend-Growth Stocks to Stash in a TFSA for Decades

CN Rail (TSX:CNR) and another dividend grower look cheap enough to own in a TFSA value fund for the long…

Read more »

Canada day banner background design of flag
Retirement

Essential RRSP Stocks: 2 Canadian Picks to Secure Your Retirement

Two dividend stocks are ideal anchors for Canadians intending to contribute to their RRSPs in 2024 and save for retirement.

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Retirement

5 Strategies for Maximizing Your CPP Benefits in 2024 and Beyond

Are you looking for the best way to max out your CPP benefits? Here are some tips you may not…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

Better Artificial Intelligence Stock: UiPath vs. C3.ai

Deciding between UiPath and C3.ai isn't easy since both have strengths and weaknesses.

Read more »

data analyze research
Investing

The 1 Stock to Own in a Sideways Economy

Here's why Restaurant Brands (TSX:QSR) remains a top TSX stock investors shouldn't ignore for long-term gains in this market.

Read more »

Retirees sip their morning coffee outside.
Retirement

Here’s the Average RRSP Balance at Age 65 and 71 in Canada

Canadian investors can consider holding dividend stocks and supplement their CPP and RRSP payouts in retirement.

Read more »

Technology
Dividend Stocks

10 Years From Now, You’ll Be Glad You Bought These Magnificent TSX Dividend Stocks

The TSX is lucrative to buy these magnificent dividend stocks in bulk and be proud of this decision 10 years…

Read more »

sale discount best price
Energy Stocks

Time to Pounce: 1 Phenomenal TSX Stock That Hasn’t Been This Cheap in a While

Now could be the time to get into Cameco (TSX:CCO) stock, which is up 81% in the last year but…

Read more »