Meritage Hospitality Group (MHGU) AI Stock Analysis

• Market Cap: $24.93M
• Dividend Yield: N/A
• Average Volume (3M): 2.59K
• Price to Earnings (P/E): 18.2
• Beta (1Y): -0.08
• Revenue Growth: -3.98%
• EPS Growth: -498.70%
• Country: US
• Employees: 330
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): -1.43
• Shares Outstanding: 6,291,000
• 10 Day Avg. Volume: 1,599
• 30 Day Avg. Volume: 2,587
• PEG Ratio: 0.65
• Price to Book (P/B): 0.72
• Price to Sales (P/S): 0.14
• P/FCF Ratio: -5.44
• Enterprise Value/Market Cap: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 0.98
• Revenue Forecast (FY): $685.80M

• Rating: 43 Neutral
• Price Target: $3.50 ▼(-15.05% Downside)

Meritage Hospitality Group's overall stock score is primarily impacted by its financial challenges, including declining revenue and high leverage. Technical analysis indicates strong bearish momentum, further weighing down the score. The valuation is moderate, but the lack of a dividend yield reduces its appeal. No earnings call or corporate events data were available to influence the score.

Positive Factors

Franchise Network Expansion

Expanding the franchise network through strategic partnerships and acquisitions can enhance market presence and drive long-term revenue growth.

Brand Recognition

Strong brand recognition in the burger and pizza segments can attract a diverse clientele, supporting sustainable revenue streams and competitive positioning.

Revenue Diversification

Diversified revenue streams from direct sales, franchise fees, and royalties provide stability and reduce dependency on a single income source.

Negative Factors

High Leverage

High leverage increases financial risk and limits flexibility, potentially impacting long-term financial stability and investment capacity.

Declining Revenue

Declining revenue growth indicates challenges in market demand or competitive pressures, which could hinder future profitability and expansion efforts.

Cash Flow Challenges

Negative free cash flow suggests difficulties in generating sufficient cash to cover operations and investments, impacting long-term financial health.

Meritage Hospitality Group Business Overview & Revenue Model

Company Description

Meritage Hospitality Group (MHGU) is a leading restaurant and hospitality company primarily engaged in the operation and management of fast-casual dining restaurants. The company focuses on franchise opportunities with well-known brands, particularly in the burger and pizza segments, providing high-quality food and exceptional customer service. MHGU operates both company-owned and franchised locations across multiple states, emphasizing growth through strategic partnerships and acquisitions within the foodservice industry.

How the Company Makes Money

Meritage Hospitality Group generates revenue primarily through the operation of its restaurants, which includes both company-owned and franchised locations. The company earns money from direct sales of food and beverages to customers, leveraging its menu offerings to attract a diverse clientele. Additionally, MHGU receives franchise fees and ongoing royalties from franchisees, which contribute to its revenue stream. The company may also benefit from partnerships with suppliers, enabling cost efficiencies and profit-sharing arrangements. Overall, MHGU's financial success is driven by its ability to maintain high restaurant performance while expanding its franchise network and enhancing brand recognition.

Meritage Hospitality Group Financial Statement Overview

Summary

Meritage Hospitality Group faces significant financial challenges, including declining revenue, reduced profitability margins, and high leverage. The negative free cash flow and low return on equity further highlight the company's financial instability.

Income Statement

Meritage Hospitality Group's income statement shows a decline in revenue with a negative growth rate of -1.34% in the TTM period. The gross profit margin has significantly decreased from 41.50% in 2024 to 16.25% in TTM, indicating increased cost pressures. The net profit margin is also low at 0.33%, reflecting challenges in maintaining profitability. Despite these challenges, the company maintains a positive EBIT margin of 1.57% and an EBITDA margin of 3.68%.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 4.69, indicating significant leverage, which could pose financial risks. The return on equity has decreased to 1.77% in the TTM period, showing reduced efficiency in generating profits from shareholders' equity. The equity ratio stands at 15.47%, suggesting a moderate level of equity financing relative to total assets.

Cash Flow

Cash flow analysis indicates a challenging environment with free cash flow remaining negative at -$31.2 million in the TTM period. The operating cash flow to net income ratio is 0.17, suggesting limited cash generation relative to net income. The free cash flow to net income ratio is negative, highlighting cash flow difficulties.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	651.63M	668.80M	672.49M	626.04M	577.13M	516.18M
Gross Profit	163.13M	277.53M	80.89M	252.19M	242.96M	228.65M
EBITDA	23.88M	37.55M	41.16M	39.04M	47.35M	44.84M
Net Income	-617.00K	7.80M	6.14M	8.48M	17.45M	14.91M
Balance Sheet
Total Assets	790.23M	810.16M	816.90M	791.32M	758.63M	689.93M
Cash, Cash Equivalents and Short-Term Investments	17.61M	20.85M	19.43M	35.37M	49.95M	32.32M
Total Debt	583.74M	598.53M	615.94M	586.15M	567.88M	521.80M
Total Liabilities	666.96M	681.35M	694.87M	674.12M	649.95M	591.51M
Stockholders Equity	122.28M	127.67M	121.14M	116.15M	105.76M	95.80M
Cash Flow
Free Cash Flow	-31.20M	-16.98M	-33.90M	-41.02M	-45.53M	2.52M
Operating Cash Flow	12.05M	23.12M	11.46M	25.75M	38.58M	36.34M
Investing Cash Flow	-31.78M	-32.24M	-74.83M	-83.24M	-83.27M	-32.47M
Financing Cash Flow	14.99M	10.53M	47.44M	42.91M	62.32M	11.51M

Meritage Hospitality Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.12
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• 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 4.12 is below the 20-day moving average (MA) of 4.32, below the 50-day MA of 6.62, and below the 200-day MA of 11.14, indicating a bearish trend. The MACD of -0.76 indicates Negative momentum. The RSI at 24.62 is Positive, neither overbought nor oversold. The STOCH value of 38.83 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
RAVE	76 Outperform	$40.36M	14.51	20.05%	―	0.35%	9.25%
BDL	71 Outperform	$53.18M	12.31	6.88%	1.92%	8.83%	41.90%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
NDLS	50 Neutral	$34.15M	-0.74	―	―	-0.35%	-37.02%
MHGU	43 Neutral	$24.93M	18.22	―	―	-3.98%	-498.70%
STKS	42 Neutral	$57.85M	-0.50	-51.90%	―	51.57%	-367.14%
FAT	39 Underperform	$9.53M	-0.03	―	671.11%	-5.26%	-44.78%