What do you do with MTY, Constellation Software, and Kraft Heinz titles? Here are some recommendations from analysts that may move prices soon. Note: the author may have a completely different opinion than that expressed.
MTY (MTY, $ 52.45): Papa Murphy is saving the day again in the fourth quarter
Papa Murphy’s ready-to-bake pizza chain should prove to be the strongest component of MTY franchisor’s annual results, which will be released on February 18, predicts Vishal Shreedhar from National Bank Financial.
This ready-to-bake pizza chain takes advantage of the popularity of pizza with discerning consumers and a business model designed for taking orders.
In comparison, the analyst notes that Domino’s revealed a strong 17.5% increase in sales of similar restaurants in the US in the third quarter, while Papa John’s sales exploded by 23.8% in North America.
Papa Murphy’s will provide one-third of the total sales of the MTY network in the fourth quarter, which includes 7,052 total organizations, analysts estimate.
His performance supports the entire group in the midst of a pandemic. Vishal Shreedhar expects a 15% decrease in total revenue (to $ 868 million), 9% in revenue (to $ 156.8 million) and 0.8% in operating profit (to $ 46.7 million).
The analyst also expects informal restaurants to perform better than the third quarter despite the imposition of new health restrictions in December to curb the new wave of COVID-19 in Quebec, Ontario and California.
While awaiting annual results and especially the franchisor’s forecast, the analyst remains neutral towards the stock even if it raises its target price from $ 56 to $ 57 by bidding itself in 2022.
Vishal Shreedhar is not yet confident enough in the sustainable recovery in the restaurant business to recommend the address. He is also concerned about the financial health of several of the group’s franchisees.
Additionally, he said, after the pandemic, Papa Murphy will not be able to support his sales.
At the current price, MTY is trading at multiples of 11 times expected operating profit in 12 months, compared to an average of 12.5 times in the past five years.
Constellation Program (CSU, $ 1,613.99): Good Quarter and New Strategy for the Serial Acquirer
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