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

• Market Cap: C$928.23M
• Dividend Yield: 4.75%
• Average Volume (3M): 7.66K
• Price to Earnings (P/E): 32.9
• Beta (1Y): 0.48
• 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: 10.01% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

• Rating: 54 Neutral
• Price Target: C$39.00 ▲(2.15% Upside)

The overall stock score reflects strong profitability and stable technical indicators, but is weighed down by high leverage and a high P/E ratio. The attractive dividend yield provides some balance to the valuation concerns.

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 franchising model, where franchisees pay initial fees and ongoing royalties based on their sales. Additionally, the company profits from company-operated restaurants, which contribute directly to sales revenue. Key revenue streams include the sale of food and beverages at its locations, promotional partnerships, and limited-time offers that drive customer traffic. A & W also benefits from strategic marketing campaigns and collaborations that enhance brand visibility and customer loyalty, contributing to overall earnings.

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

Summary

A&W Food Services of Canada Inc. displays strong profitability with a solid EBITDA margin of 27.88% and efficient cash flow management. However, challenges include a slight decline in revenue growth and high leverage, with a debt-to-equity ratio that suggests significant risk.

Income Statement

The TTM (Trailing-Twelve-Months) shows a gross profit margin of 46.61% and a net profit margin of 4.58%, indicating decent profitability. The revenue growth rate is slightly negative at -1.57% from 2023 to 2024, showing a slight decline, but the EBIT margin improved to 17.70%, and the EBITDA margin is solid at 27.88%. Overall, the company shows strong profitability, although revenue growth poses a concern.

Balance Sheet

The debt-to-equity ratio is high, with total debt significantly outweighing equity, suggesting high leverage. However, the return on equity (ROE) is not calculable due to negative equity in previous periods. The equity ratio stands at 13.63% for TTM, indicating moderate equity presence. While leverage is a risk, the company has managed to maintain its asset base.

Cash Flow

The free cash flow growth rate is negative at -7.95%, indicating a decline, but the operating cash flow to net income ratio is strong, showcasing efficient cash earnings. The free cash flow to net income ratio is robust, suggesting good cash generation relative to reported net income. Despite a dip in free cash flow growth, cash flow management appears effective.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022
Income Statement
Total Revenue	299.11M	292.30M	299.31M	299.36M
Gross Profit	172.27M	248.26M	244.45M	131.52M
EBITDA	95.44M	72.42M	64.12M	62.58M
Net Income	17.19M	11.88M	24.11M	35.20M
Balance Sheet
Total Assets	1.23B	1.21B	924.59M	886.91M
Cash, Cash Equivalents and Short-Term Investments	2.71M	22.53M	3.85M	5.04M
Total Debt	899.04M	915.36M	659.13M	631.04M
Total Liabilities	1.02B	1.04B	1.05B	1.02B
Stockholders Equity	209.50M	163.68M	-211.93M	-216.58M
Cash Flow
Free Cash Flow	48.91M	58.32M	12.95M	14.20M
Operating Cash Flow	50.38M	61.23M	18.95M	15.88M
Investing Cash Flow	-178.17M	-168.38M	5.13M	-4.63M
Financing Cash Flow	128.17M	125.83M	-25.26M	-15.88M

A & W Food Services of Canada Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.18
• 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 38.18 is above the 20-day moving average (MA) of 37.82, above the 50-day MA of 37.80, and above the 200-day MA of 34.74, indicating a bullish trend. The MACD of 0.15 indicates Negative momentum. The RSI at 53.17 is Neutral, neither overbought nor oversold. The STOCH value of 35.10 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	―	C$530.99M	16.90	10.14%	5.82%	-0.26%	-2.48%
MTY	―	$792.82M	24.30	3.64%	3.66%	1.38%	-64.10%
Sector *	―	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
AW	―	C$928.23M	32.86	57.97%	4.75%	-2.54%	-10.57%
ODD	―	C$8.37M	-3.71	―	―	-2.40%	9.13%

A & W Food Services of Canada Inc. Corporate Events

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.

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.

The most recent analyst rating on (TSE:AW) stock is a Hold with a C$38.00 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 Declares Quarterly Dividend

A&W Food Services of Canada Inc. has announced a quarterly cash dividend of $0.480 per share, payable on September 29, 2025, to shareholders of record as of September 15, 2025. This announcement reflects A&W’s ongoing commitment to providing value to its shareholders and may influence investor confidence and market positioning.

The most recent analyst rating on (TSE:AW) stock is a Hold with a C$40.00 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 Announces Retirement of Key Executive Neil Farmer

A&W Food Services of Canada Inc. announced the retirement of Neil Farmer, Vice President of Restaurants, effective December 31, 2025. Farmer, who began his career with A&W as a part-time employee, has been instrumental in fostering strong relationships with franchisees and developing a robust operations team. His departure marks a significant transition for the company, with succession plans to be announced soon, highlighting his impactful leadership and dedication to A&W’s growth.

The most recent analyst rating on (TSE:AW) stock is a Hold with a C$36.00 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 Strong Q2 2025 Results and Strategic Growth

A&W Food Services of Canada Inc. reported a strong second quarter for fiscal 2025, with notable financial growth and strategic initiatives. The company opened four new restaurants and achieved a 3.4% increase in system sales, driven by successful marketing campaigns and the launch of a new loyalty program, A&W Rewards. Financial highlights include a 7% increase in revenue to $68.8 million and a 63% rise in income before taxes to $17.2 million. These results underscore A&W’s effective market positioning and its commitment to enhancing customer engagement and operational expansion.

The most recent analyst rating on (TSE:AW) stock is a Hold with a C$36.00 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.