A & W Food Services of Canada Inc. (AW) AI Stock Analysis

• Market Cap: C$883.60M
• Dividend Yield: 5.07%
• Average Volume (3M): 7.66K
• Price to Earnings (P/E): 31.3
• Beta (1Y): 0.40
• Revenue Growth: -2.54%
• EPS Growth: -10.57%
• Country: CA
• Employees: N/A
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.71
• Shares Outstanding: 23,997,782
• 10 Day Avg. Volume: 7,901
• 30 Day Avg. Volume: 7,657
• PEG Ratio: -1.45
• Price to Book (P/B): 5.25
• Price to Sales (P/S): 2.94
• P/FCF Ratio: 14.73
• 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: C$42.00
• Price Target Upside: 13.51% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 62 Neutral
• Price Target: C$40.00 ▲(8.11% Upside)

The overall stock score of 62 reflects strong technical indicators and a high dividend yield, offset by concerns over declining revenue and high leverage. The company's strong profitability is a positive, but managing debt and improving revenue growth are critical for future performance.

Positive Factors

Profitability

High EBIT and EBITDA margins indicate efficient cost management, contributing to strong profitability and competitive positioning in the market.

Franchise Model

The franchise model provides a stable revenue stream with lower capital expenditure, enhancing scalability and reducing operational risk.

Brand Recognition

Strong brand recognition and commitment to quality ingredients help maintain customer loyalty and competitive advantage in the fast-food sector.

Negative Factors

Revenue Decline

A decline in revenue indicates potential challenges in maintaining sales momentum, which could impact long-term growth and market position.

High Leverage

Significant leverage increases financial risk and limits flexibility, potentially affecting the company's ability to invest in growth opportunities.

Declining Cash Flow

A decline in free cash flow can strain liquidity and limit the company's ability to fund operations and future investments, impacting financial stability.

A & W Food Services of Canada Inc. Business Overview & Revenue Model

Company Description

A & W Food Services of Canada Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants in Canada. The company offers burgers, chicken products, fries, onion rings, breakfast items, and kid's packs, as well as soft drinks and beer under the A&W brand name. It also offers its products online. A&W Food Services of Canada Inc. was founded in 1956 and is based in North Vancouver, Canada. It has additional locations in Canada.

How the Company Makes Money

A & W Food Services of Canada Inc. generates revenue primarily through its franchise model, where franchisees pay initial franchise fees and ongoing royalties based on their sales. The company also earns revenue from its company-operated restaurants, which contribute directly to its bottom line. Additional revenue streams include the sale of proprietary food products and beverages, as well as promotional partnerships and collaborations that enhance brand visibility and customer engagement. The company's focus on high-quality ingredients and sustainability initiatives also helps attract a loyal customer base, further driving sales and profitability.

A & W Food Services of Canada Inc. Financial Statement Overview

Summary

A & W Food Services of Canada Inc. shows strong profitability with high EBIT and EBITDA margins, but faces challenges with declining revenue and high leverage. The company's ability to manage debt and stimulate revenue growth is crucial for future stability.

Income Statement

The company's income statement shows mixed results. The TTM revenue has slightly declined by 1.6%, indicating a potential challenge in maintaining sales momentum. However, the company has strong EBIT and EBITDA margins at 37.3% and 39.6% respectively, suggesting efficient cost management. The net profit margin is healthy at 9.6%, although it has decreased compared to previous periods. Overall, while profitability metrics are strong, the revenue decline is a concern.

Balance Sheet

The balance sheet presents a high debt-to-equity ratio of 4.19, indicating significant leverage which could pose financial risk. The return on equity is moderate at 15.0%, reflecting decent profitability relative to equity. However, the equity ratio is low, suggesting a heavy reliance on debt financing. The company needs to manage its leverage to mitigate potential risks.

Cash Flow

Cash flow analysis reveals a decline in free cash flow by 26.1%, which is concerning. The operating cash flow to net income ratio is 0.34, indicating moderate cash generation from operations. The free cash flow to net income ratio is strong at 0.96, suggesting good cash conversion. Despite the decline in free cash flow, the company maintains a solid cash flow to net income ratio.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	294.31M	292.30M	299.31M	299.36M	244.98M	201.89M
Gross Profit	143.56M	248.26M	244.45M	131.52M	69.51M	56.64M
EBITDA	116.47M	72.42M	76.26M	62.58M	33.34M	24.14M
Net Income	28.19M	11.88M	24.11M	35.20M	35.54M	20.87M
Balance Sheet
Total Assets	1.24B	1.21B	924.59M	886.91M	857.82M	822.39M
Cash, Cash Equivalents and Short-Term Investments	7.30M	22.53M	3.85M	5.04M	9.63M	39.57M
Total Debt	903.76M	915.36M	659.13M	631.04M	630.62M	600.00M
Total Liabilities	1.02B	1.04B	1.05B	1.02B	1.00B	930.15M
Stockholders Equity	215.75M	163.68M	-211.93M	-216.58M	-146.81M	-107.91M
Cash Flow
Free Cash Flow	36.14M	58.32M	12.95M	14.20M	22.19M	20.06M
Operating Cash Flow	37.69M	61.23M	18.95M	15.88M	24.68M	21.82M
Investing Cash Flow	-178.13M	-168.38M	5.13M	-4.63M	7.21M	10.58M
Financing Cash Flow	128.05M	125.83M	-25.26M	-15.88M	-61.83M	-648.00K

A & W Food Services of Canada Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 37.00
• 50DMA: Negative
• 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 TSE:AW, the sentiment is Negative. The current price of 37 is below the 20-day moving average (MA) of 37.29, below the 50-day MA of 37.29, and above the 200-day MA of 36.04, indicating a bearish trend. The MACD of -0.34 indicates Positive momentum. The RSI at 37.37 is Neutral, neither overbought nor oversold. The STOCH value of 20.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:AW.

A & W Food Services of Canada Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QSP.UN	73 Outperform	C$39.98B	23.31	25.66%	3.58%	19.92%	-18.34%
PZA	73 Outperform	C$536.99M	17.13	10.19%	5.98%	1.35%	-1.11%
MTY	68 Neutral	$963.68M	29.54	3.64%	3.51%	1.38%	-64.10%
AW	62 Neutral	C$883.60M	31.34	57.97%	5.07%	-2.54%	-10.57%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

A & W Food Services of Canada Inc. Corporate Events

A&W Food Services Announces Quarterly Dividend

A&W Food Services of Canada Inc. announced a quarterly cash dividend of $0.480 per share, payable on December 24, 2025, to shareholders of record as of December 15, 2025. This decision reflects the company’s commitment to returning value to its shareholders and may positively impact investor sentiment and the company’s market positioning.

The most recent analyst rating on (TSE:AW) stock is a Hold with a C$37.00 price target. To see the full list of analyst forecasts on A & W Food Services of Canada Inc. stock, see the TSE:AW Stock Forecast page.

A&W Food Services Reports Positive Sales Growth Amidst Challenging Conditions

A&W Food Services of Canada Inc. reported its third consecutive quarter of positive Same Store Sales Growth, achieving a 1.4% increase in Q3 2025, attributed to effective marketing and value offerings. Despite a decrease in revenue due to fewer restaurant openings, the company saw a significant increase in income before taxes and adjusted EBITDA, reflecting strong operational management and cost reductions, particularly in marketing expenses.

The most recent analyst rating on (TSE:AW) stock is a Hold with a C$39.00 price target. To see the full list of analyst forecasts on A & W Food Services of Canada Inc. stock, see the TSE:AW Stock Forecast page.