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A & W Food Services of Canada Inc.
(TSX:AW)
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Rating:68Neutral
Price Target:
C$39.00
▲(7.85% Upside)
Action:Reiterated
Date:10/17/26
The score is driven primarily by strong current profitability and steady free cash flow, balanced against elevated leverage that increases financial risk. Valuation is supportive with a moderate P/E and high dividend yield, while technicals are mildly constructive. Earnings-call commentary reinforces a positive operating trajectory and steady guidance, tempered by margin pressure and cost/consumer headwinds.
Positive Factors
Franchisor-led expansion
The capital-light franchising model can support network growth without requiring the company to fund every restaurant directly. Planned unit expansion, new formats, and additional Pret locations broaden the revenue base while preserving a scalable operating structure.
Negative Factors
High structural leverage
Leverage remains high for a restaurant business and limits financial flexibility even though equity has recovered from prior negative levels. Elevated debt increases sensitivity to weaker profitability, raises refinancing exposure, and can restrict investment or shareholder returns if conditions deteriorate.
Read all positive and negative factors
Positive Factors
Negative Factors
Franchisor-led expansion
The capital-light franchising model can support network growth without requiring the company to fund every restaurant directly. Planned unit expansion, new formats, and additional Pret locations broaden the revenue base while preserving a scalable operating structure.
Read all positive factors
A & W Food Services of Canada Inc. (AW) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$866.46M
Dividend Yield5.3%
Average Volume (3M)12.61K
Price to Earnings (P/E)15.3
Beta (1Y)0.40
Revenue Growth2.77%
EPS Growth101.33%
CountryCA
Employees300
SectorGeneral
Sector StrengthN/A
IndustryRestaurants
Share Statistics
EPS (TTM)2.37
Shares Outstanding23,922,192
10 Day Avg. Volume17,831
30 Day Avg. Volume12,614
Financial Highlights & Ratios
PEG Ratio0.05
Price to Book (P/B)4.09
Price to Sales (P/S)3.08
P/FCF Ratio16.21
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$39.00Price Target Upside7.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)2.39
Revenue Forecast (FY)C$310.40M
A & W Food Services of Canada Inc. Business Overview & Revenue Model
Company Description
A&W Food Services of Canada Inc., alongside its subsidiaries, is dedicated to developing, running, and licensing quick-service eateries throughout Canada. Operating under the well-recognized A&W brand, their menu boasts a diverse selection, includ...
A & W Food Services of Canada Inc. Earnings Call Summary
Earnings Call Date:Oct 16, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Mar 10, 2027
Earnings Call Sentiment Positive
The call was broadly positive, with higher same-store sales, system sales, revenue, net income, adjusted EBITDA and free cash flow, continued restaurant and Pret expansion, deleveraging, maintained fiscal 2026 guidance and a new growth-oriented strategy. These strengths were partially offset by higher operating and general and administrative costs, adjusted EBITDA margin compression and ongoing consumer affordability and fuel-cost pressures.Positive Updates
Positive Same-Store Sales and Smash Burger Momentum
Q3 2026 same-store sales growth was 1.8%, up from 1.4% in Q3 2025, marking positive same-store sales growth in 6 of the last 7 quarters. The A&W Smashed burger limited-time offer was the primary driver of Q3 same-store sales growth and generated 15% same-store sales growth at its peak in a single week.
Negative Updates
Higher Operating Costs
Operating costs increased 27%, or $8.7 million, to $40.5 million. The increase largely reflected the cost of sales associated with additional restaurant openings and a $3.4 million increase in marketing-related costs incurred by A&W's advertising funds, which management described as largely a timing difference.
Read all updates
Q3-2026 Updates
Positive
Negative
Positive Same-Store Sales and Smash Burger Momentum
Q3 2026 same-store sales growth was 1.8%, up from 1.4% in Q3 2025, marking positive same-store sales growth in 6 of the last 7 quarters. The A&W Smashed burger limited-time offer was the primary driver of Q3 same-store sales growth and generated 15% same-store sales growth at its peak in a single week.
Read all positive updates
Company Guidance
For fiscal 2026, the outlook remains unchanged and includes achieving adjusted EBITDA within the range of $103 million to $105 million, up from the $100 million achieved in 2025; ending fiscal 2026 within the range of 1,112 to 1,120 A&W restaurants, up from 1,094 at the end of 2025; system sales growth in the range of 2.5% to 5% compared to 2.8% achieved in 2025; and same-store sales growth in the range of 0.5% to 3% compared to 1.2% achieved in 2025. A&W also continues to expect 3 to 4 franchise Pret shops to be opened by the end of fiscal 2026, in addition to the 2 corporate locations operated in Toronto, and remains committed to maintaining the current level of quarterly dividends for the foreseeable future.A & W Food Services of Canada Inc. Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
45
Neutral
Cash Flow
70
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 302.47M | 294.10M | 292.30M | 299.31M | 299.36M | 244.98M |
| Gross Profit | 142.72M | 143.56M | 248.26M | 244.45M | 131.52M | 69.51M |
| EBITDA | 109.64M | 100.54M | 72.42M | 76.26M | 62.58M | 35.66M |
| Net Income | 56.76M | 55.20M | 11.88M | 24.11M | 35.20M | 35.54M |
Balance Sheet | ||||||
| Total Assets | 1.25B | 1.24B | 1.21B | 924.59M | 886.91M | 857.82M |
| Cash, Cash Equivalents and Short-Term Investments | 907.00K | 982.00K | 22.53M | 3.85M | 5.04M | 9.63M |
| Total Debt | 899.93M | 905.92M | 915.36M | 659.13M | 631.04M | 630.62M |
| Total Liabilities | 1.02B | 1.02B | 1.04B | 1.05B | 1.02B | 1.00B |
| Stockholders Equity | 225.40M | 221.81M | 163.68M | -211.93M | -216.58M | -146.81M |
Cash Flow | ||||||
| Free Cash Flow | 77.46M | 55.90M | 58.32M | 12.95M | 14.20M | 22.19M |
| Operating Cash Flow | 79.76M | 56.97M | 61.23M | 18.95M | 15.88M | 24.68M |
| Investing Cash Flow | -2.72M | -2.48M | -168.38M | 5.13M | -4.63M | 7.21M |
| Financing Cash Flow | -83.43M | -76.04M | 125.83M | -25.26M | -15.88M | -61.83M |
A & W Food Services of Canada Inc. Technical Analysis
Positive
36.16
Price Trends
35.77
Positive
35.91
Positive
35.68
Positive
Market Momentum
0.03
Negative
55.91
Neutral
76.76
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 36.16 is above the 20-day moving average (MA) of 35.87, above the 50-day MA of 35.77, and above the 200-day MA of 35.68, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 55.91 is Neutral, neither overbought nor oversold. The STOCH value of 76.76 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
UnderperformOutperform
Sector (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | C$48.17B | 16.76 | 39.56% | 3.38% | 4.80% | 51.81% | |
68 Neutral | C$866.46M | 15.28 | 25.64% | 5.30% | 2.77% | 101.33% | |
68 Neutral | C$741.43M | 6.79 | 12.54% | 4.44% | -3.60% | 234.75% | |
67 Neutral | C$352.58M | 11.46 | 10.09% | 8.34% | -0.69% | -2.98% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% |
* General Sector Average
TSE:AW
A & W Food Services of Canada Inc.
36.22
1.55
4.46%
TSE:PZA
Pizza Pizza Royalty
10.43
-4.12
-28.31%
TSE:QSP.UN
Restaurant BrndLP
105.67
15.39
17.04%
TSE:MTY
MTY Food Group
32.46
-0.10
-0.31%
TSE:SBUX
Starbucks Corporation Shs -CAD hedged- Canadian Depositary Receipt Repr Shs Reg S
28.36
5.39
23.45%
A & W Food Services of Canada Inc. Corporate Events
Business Operations and StrategyFinancial Disclosures
A&W Posts Q3 Growth and Unveils New Strategy for Canada’s QSR Market
Positive
Oct 16, 2026
AW reported continued growth in its third quarter of fiscal 2026, with system sales up 3.8% to $497.6 million and same-store sales advancing 1.8%, helped by a national smash-style burger promotion. Revenue rose 11% to $79.3 million and income befo...
Financial Disclosures
A&W Sets October 16 Date for Fiscal Q3 2026 Results and Investor Call
Neutral
Sep 25, 2026
AW Food Services of Canada Inc. will release its financial results for the third quarter of fiscal 2026 before markets open on Friday, October 16, 2026. The disclosure continues the company’s regular reporting cadence, offering investors and...
DividendsFinancial Disclosures
A&W Food Services Declares Quarterly Cash Dividend of $0.48 per Share
Positive
Sep 1, 2026
AW Food Services of Canada Inc., a leading Canadian quick-service hamburger chain with coast-to-coast operations and signature products like The Burger Family and AW Root Beer, is listed on the Toronto Stock Exchange under the ticker AW. The compa...
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.