Meritage Hospitality Group (MHGU) AI Stock Analysis

• Market Cap: $91.35M
• Dividend Yield: N/A
• Average Volume (3M): 1.13K
• Price to Earnings (P/E): 14.3
• Beta (1Y): 0.22
• Revenue Growth: -0.56%
• EPS Growth: 105.09%
• Country: US
• Employees: 12,000
• Sector: Consumer Cyclical
• Sector Strength: 49
• Industry: Restaurants & Bars
• EPS (TTM): 1.02
• Shares Outstanding: 6,291,000
• 10 Day Avg. Volume: 1,205
• 30 Day Avg. Volume: 1,127
• PEG Ratio: 0.15
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.15
• Price to Cash Flow (P/CF): 3.60
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $24.00
• Price Target Upside: 65.29% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

Meritage Hospitality Group demonstrates challenges in financial performance with high leverage and tight profitability. The stock's technical analysis indicates weak momentum, while a high P/E ratio suggests overvaluation. The lack of earnings call insights and absence of corporate events further contribute to the stock's moderate score.

Meritage Hospitality Group Business Overview & Revenue Model

Company Description

Meritage Hospitality Group (MHGU) is a leading hospitality management company based in the United States. The company primarily operates in the restaurant sector, focusing on owning and operating quick-service and casual dining restaurant franchises. Meritage is known for its extensive network of Wendy's franchises, which forms the core of its business operations. Additionally, the company is involved in the development and management of new restaurant concepts, aiming to deliver exceptional dining experiences.

How the Company Makes Money

Meritage Hospitality Group generates revenue primarily through the operation and ownership of its franchise restaurants. The company earns income by managing a substantial number of Wendy's franchises, where it benefits from sales of food and beverages. These sales are further augmented by strategic marketing, menu innovation, and customer service initiatives that drive foot traffic and increase average ticket size. Meritage also explores growth opportunities by developing new restaurant concepts and expanding its franchise portfolio. Key revenue streams include direct sales from owned restaurants, franchise fees, and royalties from any franchising operations they may oversee. Significant partnerships, particularly with Wendy's, bolster its earnings by providing a strong brand association and operational support that enhance the profitability of its outlets.

Meritage Hospitality Group Financial Statement Overview

Summary

Meritage Hospitality Group displays stable operational efficiency but struggles with revenue growth and tight profitability margins. High leverage poses risks, though strong operating cash flows provide some support.

Income Statement

The company's revenue has experienced slight fluctuations with a recent decline from $672.5 million to $667.9 million in TTM (Trailing-Twelve-Months), indicating a modest negative growth trajectory. Gross profit margin stands at approximately 11.85% in TTM, with a net profit margin of around 0.64%, suggesting tight profitability. Both EBIT and EBITDA margins are modest, indicating stable operational efficiency amidst revenue pressures.

Balance Sheet

The company exhibits high leverage with a debt-to-equity ratio of around 4.92 in TTM, indicating substantial reliance on debt financing. However, the equity ratio of approximately 15.20% suggests a moderate level of asset financing through equity. Return on equity remains low at about 3.52%, highlighting challenges in generating returns for shareholders.

Cash Flow

The operating cash flow to net income ratio is robust at 5.66 in TTM, indicating strong cash generation relative to reported earnings. However, free cash flow remains negative at -$15.5 million, which may constrain future investments or debt repayments. The free cash flow to net income ratio is negative, underscoring cash flow challenges despite positive operating cash flows.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
667.94M	672.49M	626.04M	577.13M	516.18M	467.55M
	Gross Profit
79.14M	80.89M	252.19M	242.96M	228.65M	205.00M
	EBIT
21.81M	22.61M	25.48M	35.03M	37.40M	29.21M
	EBITDA
37.13M	41.67M	35.25M	47.35M	44.84M	41.24M
	Net Income Common Stockholders
4.26M	6.14M	8.48M	17.45M	14.91M	12.06M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
13.32M	19.43M	35.37M	49.95M	32.32M	16.94M
	Total Assets
310.86M	816.90M	791.32M	758.63M	689.93M	677.54M
	Total Debt
188.56M	615.94M	586.15M	567.88M	521.80M	536.05M
	Net Debt
175.24M	596.50M	550.78M	517.93M	489.48M	519.10M
	Total Liabilities
253.46M	694.87M	674.12M	649.95M	591.51M	594.46M
	Stockholders Equity
57.73M	121.14M	116.15M	105.76M	95.80M	80.85M
Cash Flow		Free Cash Flow
-15.46M	-33.90M	-41.02M	-45.53M	2.52M	-54.97M
	Operating Cash Flow
24.14M	11.46M	25.75M	38.58M	36.34M	35.24M
	Investing Cash Flow
-37.86M	-74.83M	-83.24M	-83.27M	-32.47M	-103.32M
	Financing Cash Flow
7.31M	47.44M	42.91M	62.32M	11.51M	71.71M

Meritage Hospitality Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 14.52
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MHGU, the sentiment is Negative. The current price of 14.52 is below the 20-day moving average (MA) of 14.67, above the 50-day MA of 14.33, and below the 200-day MA of 15.83, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 48.60 is Neutral, neither overbought nor oversold. The STOCH value of 24.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MHGU.

Meritage Hospitality Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DRI	77 Outperform	$22.19B	22.42	50.93%	2.82%	5.14%	5.30%
CAKE	74 Outperform	$2.42B	15.31	41.18%	2.20%	4.13%	56.76%
EAT	73 Outperform	$6.36B	24.89	2390.91%	―	13.67%	69.41%
Sector *	60 Neutral	$12.39B	10.47	1.07%	3.58%	1.64%	-18.33%
MHGU	55 Neutral	$91.35M	14.28	6.27%	―	-0.56%	105.09%
DENN	52 Neutral	$213.67M	10.08	-63.40%	―	-2.50%	15.46%
BLMN	36 Underperform	$738.90M	―	-13.92%	10.27%	-7.42%	-153.35%