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

• Market Cap: C$855.52M
• Dividend Yield: 4.84%
• Average Volume (3M): 7.66K
• Price to Earnings (P/E): 30.3
• Beta (1Y): 0.49
• 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: 11.11% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: C$39.00 ▲(3.17% Upside)

A&W Food Services of Canada Inc. shows strong operational management and profitability, supported by positive corporate events. However, high leverage and valuation concerns weigh on the overall score. The technical indicators suggest a cautiously optimistic outlook, with potential overbought conditions to monitor.

Positive Factors

Revenue Growth

The return to positive revenue growth indicates a recovery in sales performance, suggesting effective strategies in attracting and retaining customers, which is crucial for long-term business sustainability.

Profitability

Robust profitability metrics reflect efficient cost management and operational effectiveness, providing a solid foundation for future growth and competitive positioning in the market.

Dividend Yield

A high dividend yield enhances shareholder value and can attract income-focused investors, supporting stock stability and investor confidence over the long term.

Negative Factors

High Leverage

High leverage increases financial risk and can limit the company's ability to invest in growth opportunities, potentially impacting long-term financial stability.

Declining Cash Flow

Decreasing cash flow could indicate challenges in cash generation, affecting the company's ability to fund operations and growth initiatives without relying on external financing.

Gross Profit Margin Decline

A decline in gross profit margin suggests rising costs or pricing pressures, which could erode profitability if not managed effectively, impacting long-term financial health.

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. demonstrates strong profitability metrics with robust EBIT and EBITDA margins. However, high leverage and declining cash flow pose risks to financial flexibility. Positive revenue growth is a favorable sign, but addressing debt levels and improving cash flow generation is crucial for financial stability.

Income Statement

The company shows a strong EBIT and EBITDA margin in the TTM (Trailing-Twelve-Months) period, indicating effective cost management. However, the gross profit margin has decreased significantly compared to the previous year, which could suggest rising costs or pricing pressures. Revenue growth is positive in the TTM period, reversing the slight decline seen in the previous year.

Balance Sheet

The company has a high debt-to-equity ratio, indicating significant leverage, which could pose financial risk. The return on equity has improved in the TTM period but remains moderate. The equity ratio is low, reflecting a heavy reliance on debt financing, which could impact financial stability.

Cash Flow

Operating cash flow and free cash flow have decreased in the TTM period, reflecting potential challenges in cash generation. The free cash flow to net income ratio is strong, indicating efficient conversion of earnings into cash. However, the decline in free cash flow growth suggests potential liquidity concerns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	299.11M	292.30M	299.31M	299.36M	244.98M	201.89M
Gross Profit	172.27M	248.26M	244.45M	131.52M	69.51M	56.64M
EBITDA	95.44M	72.42M	76.26M	62.58M	33.34M	24.14M
Net Income	17.19M	11.88M	24.11M	35.20M	35.54M	20.87M
Balance Sheet
Total Assets	1.23B	1.21B	924.59M	886.91M	857.82M	822.39M
Cash, Cash Equivalents and Short-Term Investments	2.71M	22.53M	3.85M	5.04M	9.63M	39.57M
Total Debt	899.04M	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	209.50M	163.68M	-211.93M	-216.58M	-146.81M	-107.91M
Cash Flow
Free Cash Flow	48.91M	58.32M	12.95M	14.20M	22.19M	20.06M
Operating Cash Flow	50.38M	61.23M	18.95M	15.88M	24.68M	21.82M
Investing Cash Flow	-178.17M	-168.38M	5.13M	-4.63M	7.21M	10.58M
Financing Cash Flow	128.17M	125.83M	-25.26M	-15.88M	-61.83M	-648.00K

A & W Food Services of Canada Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 37.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 Positive. The current price of 37.8 is above the 20-day moving average (MA) of 37.46, above the 50-day MA of 37.38, and above the 200-day MA of 35.46, indicating a bullish trend. The MACD of 0.15 indicates Negative momentum. The RSI at 54.24 is Neutral, neither overbought nor oversold. The STOCH value of 46.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
PZA	77 Outperform	$501.97M	16.02	10.19%	5.94%	1.35%	-1.11%
MTY	68 Neutral	$871.17M	26.70	3.64%	3.46%	1.38%	-64.10%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
AW	60 Neutral	C$855.52M	30.35	57.97%	4.84%	-2.54%	-10.57%
ODD	41 Neutral	C$8.86M	-3.93	―	―	-2.40%	9.13%

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.

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.

A&W Food Services to Release Q3 Fiscal 2025 Results

A&W Food Services of Canada Inc. announced that it will release its third-quarter fiscal 2025 financial results on October 17, 2025. Following the release, a conference call will be held to discuss the results and provide updates on corporate developments, potentially impacting stakeholders’ insights into the company’s financial health and strategic direction.