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Boston Pizza Fnd Un (TSE:BPF.UN)
TSX:BPF.UN
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Boston Pizza Fund
(TSX:BPF.UN)
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Rating:71Outperform
Price Target:
C$28.00
▲(21.69% Upside)
Action:ReiteratedDate:02/20/26
The score is driven primarily by solid underlying financials (steady revenue and positive, growing free cash flow) and supportive valuation (reasonable P/E and strong yield). These are tempered by higher 2025 leverage/uncertainty around margin and cash-conversion quality, plus technical indicators that look overbought, and an earnings-call watch item around payout ratio sustainability (despite strong operating momentum).
Positive Factors
Royalty business model
The Fund's royalty model converts franchise sales into recurring revenue without operating restaurants, lowering operating leverage and capex needs. This structure generates predictable cash flows tied to franchise performance and supports durable distributions and scalable upside as the brand grows.
Consistent cash generation
Sustained positive operating and free cash flow demonstrates the Fund's ability to convert royalty income into distributable cash. Reliable FCF supports ongoing monthly distributions, funds renovations and marketing initiatives, and provides a buffer against cyclical restaurant sales swings over the medium term.
Brand and same-store sales momentum
Record system-wide sales and multi-year same-store growth signal strong consumer demand and brand relevance. Higher franchise sales expand the royalty base, underpin sustainable royalty income growth and support future distributable cash, renovations and franchise development over the coming years.
Negative Factors
Rising leverage in 2025
An uptick in debt increases financial risk and reduces balance-sheet flexibility. Higher leverage raises interest exposure and limits capacity for acquisitions or developer support, potentially constraining the Fund's ability to fund renovations, support franchisees or maintain distributions during downturns.
Elevated payout ratio
Distributions have recently exceeded distributable cash when including a special payout, stretching payout sustainability. Persistent elevated payout ratios can deplete reserves or force future distribution cuts if distributable cash underperforms, increasing governance and liquidity risk for unitholders.
Earnings and cash-conversion volatility
Atypical margins and a 2025 decline in cash-flow coverage suggest results include one-offs or timing swings. Volatile cash conversion undermines confidence that net income will reliably translate to distributable cash, complicating distribution planning and making cash forecasts less dependable.
Boston Pizza Fund (BPF.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
N/A
Dividend Yield6.19%
Average Volume (3M)27.39K
Price to Earnings (P/E)11.4
Beta (1Y)0.59
Revenue Growth4.43%
EPS Growth23.32%
CountryCA
Employees189
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.52
Shares Outstanding21,278,563
10 Day Avg. Volume33,335
30 Day Avg. Volume27,388
Financial Highlights & Ratios
PEG Ratio0.36
Price to Book (P/B)1.66
Price to Sales (P/S)9.27
P/FCF Ratio12.11
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.85
Revenue Forecast (FY)C$52.50M
Boston Pizza Fund Business Overview & Revenue Model
Company DescriptionBoston Pizza Royalties Income Fund operates as a limited purpose open-ended trust. The company, indirectly through Boston Pizza Royalties Limited Partnership, owns trade-marks used by Boston Pizza International Inc. It operates and franchises Boston Pizza restaurants. As of December 31, 2021, the company operated 383 restaurants in the royalty pool in Canada. The company was founded in 2002 and is based in Richmond, Canada.
How the Company Makes MoneyBoston Pizza Fund makes money primarily through the collection of royalty income from Boston Pizza International Inc. (BPI), which operates the Boston Pizza restaurants. The fund receives a percentage of the franchise revenues generated by the Boston Pizza restaurants in the royalty pool. This percentage is based on the top-line sales of these restaurants, providing the fund with a stable and predictable revenue stream. Additionally, the fund may benefit from any expansion of the restaurant chain, as new locations are added to the royalty pool, potentially increasing the fund's income. The fund's earnings are also influenced by factors such as overall economic conditions, consumer spending habits, and the performance of the restaurant industry in Canada.
Boston Pizza Fund Earnings Call Summary
Earnings Call Date:Feb 13, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Positive
The call conveyed a largely positive performance: record annual franchise sales, solid same-restaurant sales, growth in royalty/distribution income, higher net income and distributable cash per unit, successful marketing and significant renovation activity. Key negatives were a higher payout ratio (largely due to a one-time special distribution), increased income taxes and no openings in 2025. Management emphasized sustainable monthly distributions, a renewed development pipeline for 2026, and continued promotional initiatives, indicating confidence in ongoing momentum.Q4-2025 Updates
Positive Updates
Record Annual Franchise Sales
Boston Pizza Restaurants achieved the highest annual total franchise sales in brand history: $976.3 million for FY2025, up 4.8% versus FY2024 ($931.7 million).
Strong Quarterly and Same-Restaurant Sales Momentum
Royalty Pool franchise sales for Q4 were $244.4 million (up 4.3% vs Q4 2024). Same-restaurant sales (SRS) were 3.7% for Q4 and 4.7% for the year, driven by takeout/delivery momentum, promotions, and playoff-related traffic.
Increases in Royalty and Distribution Income
Royalty income rose to $9.8 million in Q4 ($39.1 million for the year) from $9.4 million Q4 2024 ($37.3 million for the year). Distribution income was $3.2 million in Q4 ($12.8 million for the year) versus $3.1 million Q4 2024 ($12.2 million).
Higher Net and Comprehensive Income
Fund net and comprehensive income increased to $11.1 million in Q4 2025 (from $6.6 million in Q4 2024) and $42.2 million for the year (from $31.9 million in 2024). Q4 increase driven primarily by a $5.7 million fair value gain.
Growth in Distributable Cash and Per-Unit Metrics
Distributable cash rose to $7.9 million in Q4 (up 5.1% vs Q4 2024) and $31.6 million for the year (up 4.1% vs 2024). Distributable cash per unit increased to $0.369 in Q4 (+5.1%) and $1.487 for the year (+4.1%).
Operating Cash Flow Improvement
Cash flows from operating activities increased to $9.9 million in Q4 (from $9.4 million) and $39.7 million for the year (from $38.1 million), supporting distributable cash growth.
Capital Investment and Brand Enhancements
Forty restaurant renovations completed in 2025 (9 in Q4), up from 28 in the prior year, with continued franchisee engagement and audiovisual and guest-facing upgrades planned.
Successful Marketing and Menu Innovations
Game day and holiday promotions (e.g., Pepperoni Stinger Pizza, Stuffed Crust Mozza Sticks) and gift-card incentives drove guest engagement; new items became core menu offerings and promotions were supported by TV, digital and social media.
Return of Growth Pipeline for 2026
While no new restaurants opened in 2025, the company has projects underway (notably in BC and Ontario) and a renewed pipeline of development opportunities, indicating expected openings in 2026.
Special and Ongoing Distributions
A special cash distribution of $0.11 per unit was declared and paid in Dec 2025 in recognition of record franchise sales; trustees approved a monthly cash distribution of $0.12 per unit for Jan 2026 to be paid in Feb 2026.
Negative Updates
Elevated Payout Ratio Due to Special Distribution
Payout ratio rose to 127.3% in Q4 2025 (vs 118.4% in Q4 2024) and 101.9% for the year (vs 99.9% in 2024), driven by distributions (including the special $0.11) increasing faster than distributable cash. Without the special distribution, Q4 and year payout ratios would have been 97.5% and 94.5%, respectively.
Increased Income Tax Expense
Income tax expense increased by $1.5 million in Q4 year-over-year and by $2.6 million for the full year, partially offsetting gains in net income.
Higher Distributions Paid
Distributions paid increased by $1.1 million (13%) in Q4 and $1.9 million (6.2%) for the year, contributing to the higher payout ratio and increased cash outflows.
No New Restaurant Openings in 2025
Despite pipeline activity, there were no new Boston Pizza restaurant openings in 2025, indicating a temporary slowdown in unit growth; openings are expected to resume in 2026 but timing depends on construction and permitting.
Rising Net Interest and Other Expenses
Net interest expense increased by approximately $0.3 million (Q4 and year) and administrative/other items fluctuated, though some administrative expenses declined year-over-year by $2.2 million, overall expense movement included unfavorable items.
Macroeconomic and Trade Uncertainties
Management acknowledged mounting trade tensions and broader macroeconomic uncertainties which are being monitored and could impact future consumer behaviour and operations.
Company Guidance
The call guided that the trustees approved a monthly cash distribution of $0.12 per unit for January 2026 (payable Feb. 27, 2026; record date Feb. 21, 2026) and emphasized sustainability and close monitoring of available cash balances (after a special $0.11/unit distribution paid Dec. 31, 2025); operational guidance highlighted Q1 marketing and menu initiatives (Popular Pasta Tuesday with pastas from $11.99/$15.99, Valentine’s heart‑shaped pizzas with $1 donated per pizza, gift‑card promo of $50 → $10 promotional card redeemable Jan–Mar 2026, NFL/Pepsi and upcoming Olympics/World Cup activations) and continued restaurant investment (9 renovations in Q4, 40 in 2025 and a similar ~40 renovation target for 2026, two new restaurant projects pushed from 2025 into early 2026), while key recent metrics noted were Q4 franchise sales $244.4M / FY $976.3M (+4.3% Q4, +4.8% Y/Y), SRS +3.7% Q4 / +4.7% FY, royalty income $9.8M Q4 / $39.1M FY, distribution income $3.2M Q4 / $12.8M FY, cash from operations $9.9M Q4 / $39.7M FY, distributable cash $7.9M Q4 / $31.6M FY (per unit $0.369 Q4 / $1.487 FY), and payout ratios 127.3% Q4 (97.5% ex‑special) and 101.9% FY (94.5% ex‑special); management reiterated focus on supporting franchisees and driving sustainable, long‑term growth (average sales per location ≈ $3.3M).Boston Pizza Fund Financial Statement Overview
Summary
Steady revenue growth and consistently positive/free-cash-flow generation support fundamentals, and profitability improved into 2025. Offsetting factors are the notable increase in debt in 2025 and signs that profitability/cash conversion may include volatility or non-recurring effects (unusually high margins and a sharp drop in operating cash flow coverage in 2025).Income Statement
Revenue has grown steadily from 2022–2025 (2025 up ~2.2% vs. 2024; 2024 essentially flat), supporting a generally positive top-line trajectory after the 2020 decline. Profitability appears exceptionally high in the provided data (very strong net income and unusually high operating profit versus revenue in 2022–2025), which boosts the score but also raises a data-quality/one-time-item risk given how atypical these margins are for the industry. Net income improved meaningfully from 2023 to 2025, but results show volatility historically (e.g., 2020 downturn and 2021 inconsistencies), suggesting earnings may not be fully stable year-to-year.78
Positive
Balance Sheet
Leverage is moderate overall, with debt-to-equity generally in the ~0.31–0.49 range across 2020–2025. However, total debt rose notably in 2025 versus 2024, which increases financial risk and reduces balance-sheet flexibility. Equity has grown gradually and returns on equity have improved into 2025, indicating better profitability on the capital base, but the recent step-up in debt is the key watch item.67
Positive
Cash Flow
Operating cash flow and free cash flow are consistently positive and have grown over time (2025 free cash flow up ~2.8% vs. 2024). Free cash flow closely matches net income in each year, indicating reported earnings are broadly supported by cash generation based on the provided figures. That said, the cash conversion signal is mixed: the provided operating cash flow coverage metric is strong in 2022–2024 but drops sharply in 2025, suggesting either weaker cash conversion or a one-off working-capital/measurement swing that merits monitoring.72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 50.78M | 51.89M | 49.51M | 49.19M | 45.47M | 35.15M |
| Gross Profit | 50.72M | 51.62M | 49.51M | 49.19M | 45.47M | 35.15M |
| EBITDA | 58.05M | 65.14M | 51.97M | 47.30M | 46.96M | 554.00K |
| Net Income | 36.61M | 42.17M | 31.87M | 29.57M | 30.58M | 37.41M |
Balance Sheet | ||||||
| Total Assets | 435.95M | 449.45M | 422.89M | 413.06M | 413.70M | 411.31M |
| Cash, Cash Equivalents and Short-Term Investments | 5.31M | 3.89M | 4.57M | 4.59M | 5.21M | 5.16M |
| Total Debt | 86.57M | 141.54M | 97.06M | 123.76M | 86.44M | 126.02M |
| Total Liabilities | 147.30M | 159.41M | 142.66M | 134.17M | 133.12M | 135.51M |
| Stockholders Equity | 288.65M | 290.05M | 280.22M | 278.89M | 280.58M | 275.80M |
Cash Flow | ||||||
| Free Cash Flow | 38.61M | 39.70M | 38.12M | 37.93M | 34.35M | 29.18M |
| Operating Cash Flow | 38.61M | 39.70M | 38.12M | 37.93M | 34.35M | 30.48M |
| Investing Cash Flow | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -1.29M |
| Financing Cash Flow | -38.49M | -40.38M | -38.14M | -38.55M | -34.30M | -33.01M |
Boston Pizza Fund Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | C$46.63B | 50.42 | 25.66% | 3.58% | 19.92% | -18.34% | |
73 Outperform | C$523.65M | 16.65 | 10.35% | 5.98% | 1.35% | -1.11% | |
72 Outperform | ― | 14.42 | 9.03% | 7.99% | ― | -62.68% | |
71 Outperform | ― | 11.40 | 13.06% | 6.19% | 4.43% | 23.32% | |
66 Neutral | C$890.81M | 7.28 | 3.64% | 3.51% | 1.38% | -64.10% | |
62 Neutral | C$858.73M | 16.42 | 27.32% | 5.07% | -2.54% | -10.57% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
TSE:BPF.UN
Boston Pizza Fund
23.59
7.73
48.73%
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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.