Sometimes, you get a little something unexpected in stocks, despite basic logic suggesting some results just shouldn’t happen. MTY Food Group (TSE:MTY) posted word about its second-quarter profit, but despite a disappointing conclusion, investors were anything but, sending shares blasting up nearly 10% in Thursday morning’s trading session. MTY Food Group, which franchises a set of restaurants and operates several besides, brought in C$27.3 million in net income, which worked out to about C$1.13 per diluted share.
That compares poorly against the second quarter of 2023, when MTY posted C$30.4 million in profit, around C$1.24 per diluted share.
However, the reason behind the slip may have given investors a lot more hope than you’d think. MTY noted that the losses are likely connected to “…impairment charges on property, plant and equipment and intangibles assets.” The fact that there was also a slip in revenue—down from C$305.2 million in 2023 to C$303.7 million today—suggests that there were also some customers holding back on dining out.
Winning in Other Ways
Though the earnings report did disappoint on some fronts, it actually came out ahead against analyst projections. FactSet analysts were looking for C$294.6 million in revenue this quarter, which means even though MTY was down against last year at this time, it still beat estimates, and that likely fueled the hefty run-up in trading.
In fact, MTY pointed to strong sales within its U.S. operations as a major part of the reason it performed as well as it did. Plus, its franchising operations were proving to be both profitable and solid in margins.
Is MTY Food Group Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on MTY stock based on three Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 28.03% loss in its share price over the past year, the average MTY price target of C$53.64 per share implies 14.71% upside potential.
