Meritage Hospitality Group (MHGU)
OTHER OTC:MHGU
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Meritage Hospitality Group
(OTC:MHGU)
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Rating:40Underperform
Price Target:
$1.50
▼(-63.59% Downside)
Action:Downgraded
Date:05/19/26
The score is primarily pressured by weak financial performance—losses, very high leverage, and negative free cash flow—followed by bearish technicals (price below key moving averages and negative MACD). Valuation provides limited offset because the negative P/E reflects losses and dividend yield data is unavailable.
Positive Factors
Healthy gross margin
A ~39.6% gross margin indicates durable product-level economics and pricing power or effective COGS control at the restaurant level. Over 2–6 months this margin provides a base to absorb operating cost reductions or modest sales recovery, supporting a faster path back to profitability if SG&A and labor are managed.
Negative Factors
Very high and rising leverage
Debt-to-equity near 6.5x sharply limits financial flexibility and increases fixed interest burdens. Over the next several months this structural leverage heightens refinancing and covenant risks, reduces ability to invest in operations, and magnifies earnings volatility from modest revenue swings, making recovery more difficult without deleveraging.
Read all positive and negative factors
Positive Factors
Negative Factors
Healthy gross margin
A ~39.6% gross margin indicates durable product-level economics and pricing power or effective COGS control at the restaurant level. Over 2–6 months this margin provides a base to absorb operating cost reductions or modest sales recovery, supporting a faster path back to profitability if SG&A and labor are managed.
Read all positive factors
Meritage Hospitality Group (MHGU) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.02M
Dividend YieldN/A
Average Volume (3M)7.04K
Price to Earnings (P/E)―
Beta (1Y)-0.22
Revenue Growth-9.81%
EPS Growth-1728.27%
CountryUS
Employees330
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)N/A
Shares Outstanding6,291,000
10 Day Avg. Volume16,325
30 Day Avg. Volume7,036
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.15
Price to Sales (P/S)0.02
P/FCF Ratio-0.73
Enterprise Value/Market Cap47.03
Enterprise Value/Revenue0.95
Enterprise Value/Gross Profit2.39
Enterprise Value/Ebitda94.99
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Meritage Hospitality Group Business Overview & Revenue Model
Company Description
Meritage Hospitality Group Inc. operates quick-service and casual dining restaurants. The company operates restaurants under the Wendy's, Morning Belle, Stan's Tacos, Freighters Eatery & Taproom, and Twisted Roosters brand names. As of January 2, ...
How the Company Makes Money
MHGU makes money mainly by operating franchised QSR restaurants and retaining the restaurant-level sales generated from those locations. Its core revenue stream is food and beverage sales to customers (including dine-in, drive-thru, and takeout, a...
Meritage Hospitality Group Financial Statement Overview
Summary
Income Statement
28
Negative
Balance Sheet
22
Negative
Cash Flow
20
Very Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 595.75M | 617.70M | 668.80M | 672.49M | 626.04M | 577.13M |
| Gross Profit | 236.21M | 241.10M | 277.53M | 80.89M | 252.19M | 242.96M |
| EBITDA | 5.95M | 10.09M | 37.55M | 41.16M | 39.04M | 47.35M |
| Net Income | -36.98M | -31.75M | 7.80M | 6.14M | 8.48M | 17.45M |
Balance Sheet | ||||||
| Total Assets | 760.55M | 754.76M | 810.16M | 816.90M | 791.32M | 758.63M |
| Cash, Cash Equivalents and Short-Term Investments | 19.25M | 11.47M | 20.85M | 19.43M | 35.37M | 49.95M |
| Total Debt | 571.58M | 572.17M | 598.53M | 615.94M | 586.15M | 567.88M |
| Total Liabilities | 671.81M | 656.30M | 681.35M | 694.87M | 674.12M | 649.95M |
| Stockholders Equity | 87.53M | 97.21M | 127.67M | 121.14M | 116.15M | 105.76M |
Cash Flow | ||||||
| Free Cash Flow | -16.44M | -19.98M | -16.98M | -33.90M | -41.02M | -45.53M |
| Operating Cash Flow | 2.35M | 4.94M | 23.12M | 11.46M | 25.75M | 38.58M |
| Investing Cash Flow | -14.25M | -19.72M | -32.24M | -74.83M | -83.24M | -83.27M |
| Financing Cash Flow | 8.17M | 5.40M | 10.53M | 47.44M | 42.91M | 62.32M |
Meritage Hospitality Group Technical Analysis
Negative
4.12
Price Trends
2.17
Negative
2.43
Negative
5.06
Negative
Market Momentum
-0.15
Positive
46.82
Neutral
53.78
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 above the 20-day moving average (MA) of 1.96, above the 50-day MA of 2.17, and below the 200-day MA of 5.06, indicating a bearish trend. The MACD of -0.15 indicates Positive momentum. The RSI at 46.82 is Neutral, neither overbought nor oversold. The STOCH value of 53.78 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $43.20M | 14.75 | 19.21% | ― | 3.20% | 9.92% | |
62 Neutral | $63.19M | 10.59 | 9.04% | 1.89% | 5.74% | 47.36% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
57 Neutral | $74.24M | -2.00 | 90.61% | ― | -0.12% | 7.25% | |
51 Neutral | $63.29M | -0.70 | -65.14% | ― | 0.99% | -217.64% | |
40 Underperform | $12.02M | -0.32 | ― | ― | -9.81% | -1728.27% |
* Consumer Cyclical Sector Average
MHGU
Meritage Hospitality Group
1.91
-11.44
-85.69%
BDL
Flanigan's Enterprises
34.00
6.37
23.05%
RAVE
Rave Restaurant Group
3.04
0.29
10.55%
NDLS
Noodles & Co
12.60
6.11
94.20%
STKS
The ONE Group Hospitality
2.01
-1.39
-40.86%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.