MTY Food Group (MTY.TO), mcap=C$1.4bn, price $55.66 vs $58.00

$MTY.TO pitch:
– Restaurant franchisor in US and Canada at 11x FCF.
– 80 banners and 6.7k units.
– High-quality business with sustainable double-digit growth potential.
– It relies on the combination of attractively priced acquisitions and effective cost-cutting to grow at attractive rates of return.
– Investors misperceive the company as a melting ice cube with weak and unprofitable franchisees.
– However, management is gearing towards generating value through acquisitions of less-sexy (and in turn cheaper) mature brands and not necessarily growing the existing operations.
– Organic growth is zero/negative almost by the design of the strategy.
– Tons of dry powder to deploy in a proven and underappreciate acquisition strategy with high returns.

$MTY.TO valuation: Trades at 11xFCF

Exp. gain: Not specified.

Full MTY.TO write-up (free guest account required):

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