Meritage Hospitality Group (MHGU) AI Stock Analysis

• Market Cap: $74.77M
• Dividend Yield: N/A
• Average Volume (3M): 646.00
• Price to Earnings (P/E): 54.7
• Beta (1Y): 0.08
• Revenue Growth: -2.53%
• EPS Growth: -66.89%
• Country: US
• Employees: 330
• Sector: Consumer Cyclical
• Sector Strength: 74
• Industry: Restaurants
• EPS (TTM): -0.51
• Shares Outstanding: 6,291,000
• 10 Day Avg. Volume: 184
• 30 Day Avg. Volume: 646
• PEG Ratio: 0.06
• Price to Book (P/B): 0.76
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -5.42
• 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: $24.00
• Price Target Upside: 102.02% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

Meritage Hospitality Group's stock score is weighed down by financial challenges, particularly high leverage and negative free cash flow. The bearish technical indicators and high P/E ratio further contribute to a cautious outlook. Investors should be aware of the company's financial management capabilities and market trends as key factors.

Meritage Hospitality Group Business Overview & Revenue Model

Company Description

Meritage Hospitality Group (MHGU) is a diversified hospitality and restaurant operator primarily focused on the quick-service and casual dining sectors. The company operates a wide array of restaurants under well-known brands, including Wendy's franchises, and is involved in the development and management of both owned and franchised restaurant locations. In addition to its restaurant operations, Meritage Hospitality Group is also engaged in real estate development and property management related to its restaurant properties.

How the Company Makes Money

Meritage Hospitality Group generates revenue primarily through its operation of franchised and company-owned restaurant locations, with a significant portion coming from its Wendy's franchises. The company earns money by selling food and beverages directly to consumers at its restaurant locations. Additionally, the company benefits from franchise fees and royalty payments from franchised locations. Meritage Hospitality Group also engages in real estate development, which includes acquiring, developing, and leasing properties, thereby earning additional income from rental and property management services. Strategic partnerships with major restaurant brands and effective cost management are critical factors that contribute to its profitability.

Meritage Hospitality Group Financial Statement Overview

Summary

Meritage Hospitality Group shows stable revenue with strong gross margins, but faces challenges in profitability and high financial leverage. The consistent negative free cash flow highlights the need for careful financial management to navigate its high debt levels and fund future growth.

Income Statement

The revenue growth has been modest, with a slight decline in the latest year. Gross profit margin remains strong, indicating effective cost management. However, net profit margin is relatively low, suggesting pressure on profitability. The drop in EBIT and EBITDA margins over the years reflects operational challenges.

Balance Sheet

The debt-to-equity ratio is high, indicating significant leverage, which could pose a risk if earnings do not improve. Return on equity is moderate, reflecting average returns for shareholders. The equity ratio is relatively low, signaling a heavy reliance on debt financing.

Cash Flow

Operating cash flow is positive, but free cash flow is consistently negative due to high capital expenditures. The cash flow to net income ratios suggest some operational cash generation capability, but the lack of free cash flow indicates limited flexibility to fund growth without external financing.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
668.80M	672.49M	626.04M	577.13M	516.18M
	Gross Profit
277.53M	80.89M	252.19M	242.96M	228.65M
	EBIT
13.35M	22.61M	25.48M	35.03M	37.40M
	EBITDA
37.55M	41.67M	35.25M	47.35M	44.84M
	Net Income Common Stockholders
7.80M	6.14M	8.48M	17.45M	14.91M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
20.85M	19.43M	35.37M	49.95M	32.32M
	Total Assets
810.16M	816.90M	791.32M	758.63M	689.93M
	Total Debt
598.53M	615.94M	586.15M	567.88M	521.80M
	Net Debt
577.68M	596.50M	550.78M	517.93M	489.48M
	Total Liabilities
681.35M	694.87M	674.12M	649.95M	591.51M
	Stockholders Equity
127.67M	121.14M	116.15M	105.76M	95.80M
Cash Flow		Free Cash Flow
-16.98M	-33.90M	-41.02M	-45.53M	2.52M
	Operating Cash Flow
23.12M	11.46M	25.75M	38.58M	36.34M
	Investing Cash Flow
-32.24M	-74.83M	-83.24M	-83.27M	-32.47M
	Financing Cash Flow
10.53M	47.44M	42.91M	62.32M	11.51M

Meritage Hospitality Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 11.88
• 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 MHGU, the sentiment is Negative. The current price of 11.88 is below the 20-day moving average (MA) of 12.72, below the 50-day MA of 13.32, and below the 200-day MA of 14.85, indicating a bearish trend. The MACD of -0.27 indicates Positive momentum. The RSI at 41.63 is Neutral, neither overbought nor oversold. The STOCH value of 39.87 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BDL	63 Neutral	$43.46M	13.16	5.48%	2.14%	8.87%	-5.22%
Sector *	61 Neutral	$6.98B	11.35	2.88%	3.90%	2.65%	-21.84%
STKS	61 Neutral	$131.65M	―	-9.31%	―	138.50%	-60576.19%
MHGU	52 Neutral	$74.77M	54.67	1.83%	―	-2.53%	-66.89%
FAT	41 Neutral	$45.70M	―	38.50%	21.96%	10.63%	-93.67%
THCH	38 Underperform	$89.12M	―		―	-2.48%	24.95%
RRGB	38 Underperform	$57.80M	―	92.02%	―	-4.19%	-266.52%