If you’ve been keeping an eye on Canadian consumer defensive stocks lately, you’ve likely noticed Maple Leaf Foods (TSX:MFI) stock making some serious moves. Last month, the packaged foods stock surged an impressive 21%, marking its second-best monthly performance in the past five years, and caught the attention of growth investors. But after such a strong run, should investors consider buying shares today, or has the opportunity already passed?
Maple Leaf Foods finds growth stamina
For much of the past few years, Maple Leaf Foods faced its fair share of challenges from supply chain issues to fluctuating consumer demand. But the company’s latest quarterly results, reported in August, told a very different story.
The second quarter of 2025 cemented a turnaround triumph for Maple Leaf Foods. Revenue climbed 8.5%, and the company swung dramatically into profit, with adjusted operating earnings jumping 57.2% year over year. Even more striking, diluted earnings per share soared from a loss of $0.21 in the second quarter of 2024 to a profit of $0.46 this year.
A significant part of this improvement stems from much stronger operational profitability. Maple Leaf’s adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) margins, a useful measure of operational profitability, expanded to 13.3% last quarter. This was a major improvement from the 5.8% margins seen back in 2022. Better yet, the company is now generating significant free cash flow (FCF), the cash left after accounting for capital expenditures. Over the past 12 months, FCF reached $487 million, a significant improvement from the negative free cash flow generated in 2022.
A fortified balance sheet
These improvements have also strengthened Maple Leaf’s balance sheet. The company’s net debt-to-adjusted EBITDA ratio has dropped to an investment-grade level of 2.1, down from a worrying six in early 2023. Maple Leaf Foods is in a much more financially flexible position today.
An exciting chapter is loading for Maple Leaf Foods stock investors
A new investment profile is unfolding. Maple Leaf Foods is in advanced stages of spinning off its pork business into a separate publicly traded company called Canada Packers. The transaction is more than a corporate reshuffle. It’s a strategic move that could unlock significant value for shareholders. The pork division saw sales grow 10.7% last quarter, and as a standalone company, it will be able to focus entirely on becoming a global leader in pork production and potentially command great valuation multiples.
Existing Maple Leaf shareholders will receive an 84% stake in the new entity, while Maple Leaf itself will retain a 16% ownership. Spin-offs often allow investors to appreciate the true value of each business, and this one looks promising.
“Buy Canadian” movement moving Maple Leaf earnings?
You might be wondering whether Maple Leaf Foods is benefiting from a “Buy Canadian” trend, especially amid recent trade tensions and tariffs. Management has acknowledged shifting consumer preferences and has launched marketing campaigns aligned with patriotic buying. While it’s hard to measure the exact impact, it certainly doesn’t hurt.
Valuation
With Maple Leaf stock trading near 52-week highs, it’s natural to ask if shares are too expensive. MFI stock’s forward price-to-earnings (P/E) ratio of 16.1 is in line with peers like Premium Brands and Saputo, though higher than the overall industry average. Its price-to-free-cash-flow multiple of 7.7 is also above the industry norm. However, its enterprise value-to-EBITDA (EV/EBITDA — a valuation measure that compares company value, including debt, to operating earnings) of 9.3 looks attractive compared to the industry average of 14.1.
Can you buy Maple Leaf stock for income?
Maple Leaf Foods stock pays a quarterly dividend that yields 2.7% annually. More importantly, the company has raised its dividend for 10 consecutive years, including a 9% increase this year. With a payout ratio under 65%, the dividend appears well-covered and safe.
Investor takeaway
So, is Maple Leaf Foods a buy after gaining 21% in a month? There’s a strong case to be made. The dividend stock remains a top Canadian consumer defensive stock to buy in September, more so given its renewed operational strength, a compelling corporate action underway, and a shareholder-friendly capital-allocation policy.
