A&W FOOD SERVICES OF CANADA (AW.CA) Stock Fundamental Analysis
TSX:AW - Toronto Stock Exchange - CA0002251027 - Common Stock - Currency: CAD
AW gets a fundamental rating of 3 out of 10. The analysis compared the fundamentals against 19 industry peers in the Hotels, Restaurants & Leisure industry. While AW is still in line with the averages on profitability rating, there are concerns on its financial health. AW has a valuation in line with the averages, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
AW had positive earnings in the past year.
In the past year AW had a positive cash flow from operations.
1.2 Ratios
Looking at the Return On Assets, with a value of 1.40%, AW is in line with its industry, outperforming 47.37% of the companies in the same industry.
Looking at the Return On Equity, with a value of 8.21%, AW is in the better half of the industry, outperforming 63.16% of the companies in the same industry.
AW has a Return On Invested Capital of 3.78%. This is comparable to the rest of the industry: AW outperforms 52.63% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AW is below the industry average of 6.92%.
The last Return On Invested Capital (3.78%) for AW is above the 3 year average (2.73%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.4% | ||
| ROE | 8.21% | ||
| ROIC | 3.78% |
ROA(3y)2.52%
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)2.73%
ROIC(5y)N/A
1.3 Margins
The Profit Margin of AW (5.75%) is better than 63.16% of its industry peers.
AW's Profit Margin has declined in the last couple of years.
With a decent Operating Margin value of 22.70%, AW is doing good in the industry, outperforming 73.68% of the companies in the same industry.
In the last couple of years the Operating Margin of AW has grown nicely.
With an excellent Gross Margin value of 93.47%, AW belongs to the best of the industry, outperforming 94.74% of the companies in the same industry.
AW's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 22.7% | ||
| PM (TTM) | 5.75% | ||
| GM | 93.47% |
OM growth 3Y3.59%
OM growth 5YN/A
PM growth 3Y-34.57%
PM growth 5YN/A
GM growth 3Y1.67%
GM growth 5YN/A
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so AW is destroying value.
The number of shares outstanding for AW remains at a similar level compared to 1 year ago.
Compared to 1 year ago, AW has a worse debt to assets ratio.
2.2 Solvency
AW has an Altman-Z score of 0.72. This is a bad value and indicates that AW is not financially healthy and even has some risk of bankruptcy.
AW has a Altman-Z score (0.72) which is in line with its industry peers.
AW has a debt to FCF ratio of 19.79. This is a negative value and a sign of low solvency as AW would need 19.79 years to pay back of all of its debts.
The Debt to FCF ratio of AW (19.79) is comparable to the rest of the industry.
A Debt/Equity ratio of 4.12 is on the high side and indicates that AW has dependencies on debt financing.
With a Debt to Equity ratio value of 4.12, AW is not doing good in the industry: 63.16% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 4.12 | ||
| Debt/FCF | 19.79 | ||
| Altman-Z | 0.72 |
ROIC/WACC0.66
WACC5.75%
2.3 Liquidity
A Current Ratio of 0.84 indicates that AW may have some problems paying its short term obligations.
With a Current ratio value of 0.84, AW perfoms like the industry average, outperforming 47.37% of the companies in the same industry.
AW has a Quick Ratio of 0.84. This is a bad value and indicates that AW is not financially healthy enough and could expect problems in meeting its short term obligations.
AW has a Quick ratio (0.79) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.79 |
3. Growth
3.1 Past
AW shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -50.72%.
The earnings per share for AW have been decreasing by -30.60% on average. This is quite bad
The Revenue has decreased by -2.34% in the past year.
The Revenue has been growing slightly by 6.06% on average over the past years.
EPS 1Y (TTM)-50.72%
EPS 3Y-30.6%
EPS 5YN/A
EPS Q2Q%43.06%
Revenue 1Y (TTM)-2.34%
Revenue growth 3Y6.06%
Revenue growth 5YN/A
Sales Q2Q%6.93%
3.2 Future
Based on estimates for the next years, AW will show a very strong growth in Earnings Per Share. The EPS will grow by 134.38% on average per year.
Based on estimates for the next years, AW will show a small growth in Revenue. The Revenue will grow by 3.53% on average per year.
EPS Next Y413.96%
EPS Next 2Y134.38%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year1.93%
Revenue Next 2Y3.53%
Revenue Next 3YN/A
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 54.93 indicates a quite expensive valuation of AW.
The rest of the industry has a similar Price/Earnings ratio as AW.
AW's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 27.03.
Based on the Price/Forward Earnings ratio of 14.34, the valuation of AW can be described as correct.
Based on the Price/Forward Earnings ratio, AW is valued a bit cheaper than 78.95% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of AW to the average of the S&P500 Index (36.28), we can say AW is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.93 | ||
| Fwd PE | 14.34 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as AW.
AW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.61 | ||
| EV/EBITDA | 24.58 |
4.3 Compensation for Growth
AW's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as AW's earnings are expected to grow with 134.38% in the coming years.
PEG (NY)0.13
PEG (5Y)N/A
EPS Next 2Y134.38%
EPS Next 3YN/A
5. Dividend
5.1 Amount
AW has a Yearly Dividend Yield of 4.64%, which is a nice return.
Compared to an average industry Dividend Yield of 4.35, AW pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.40, AW pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.64% |
5.2 History
AW does not have a reliable dividend history as it only pays dividend since a couple or years.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
150.73% of the earnings are spent on dividend by AW. This is not a sustainable payout ratio.
DP150.73%
EPS Next 2Y134.38%
EPS Next 3YN/A
TSX:AW (8/5/2025, 7:00:00 PM)
39
-0.13 (-0.33%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners7.67%
Inst Owner ChangeN/A
Ins Owners37.73%
Ins Owner ChangeN/A
Market Cap936.00M
Analysts42.22
Price Target35.7 (-8.46%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.64% |
Yearly Dividend1.18
Dividend Growth(5Y)N/A
DP150.73%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-24.58%
Min EPS beat(2)-32.86%
Max EPS beat(2)-16.3%
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)0
Avg Revenue beat(2)-2.31%
Min Revenue beat(2)-2.38%
Max Revenue beat(2)-2.23%
Revenue beat(4)N/A
Avg Revenue beat(4)N/A
Min Revenue beat(4)N/A
Max Revenue beat(4)N/A
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)0%
PT rev (3m)-2.78%
EPS NQ rev (1m)4.27%
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)-12.16%
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-2.89%
Revenue NY rev (3m)-6.24%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.93 | ||
| Fwd PE | 14.34 | ||
| P/S | 3.13 | ||
| P/FCF | 20.61 | ||
| P/OCF | 19.33 | ||
| P/B | 4.47 | ||
| P/tB | N/A | ||
| EV/EBITDA | 24.58 |
EPS(TTM)0.71
EY1.82%
EPS(NY)2.72
Fwd EY6.97%
FCF(TTM)1.89
FCFY4.85%
OCF(TTM)2.02
OCFY5.17%
SpS12.46
BVpS8.73
TBVpS-11.87
PEG (NY)0.13
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.4% | ||
| ROE | 8.21% | ||
| ROCE | 6.09% | ||
| ROIC | 3.78% | ||
| ROICexc | 3.79% | ||
| ROICexgc | 6.82% | ||
| OM | 22.7% | ||
| PM (TTM) | 5.75% | ||
| GM | 93.47% | ||
| FCFM | 15.19% |
ROA(3y)2.52%
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)2.73%
ROIC(5y)N/A
ROICexc(3y)2.76%
ROICexc(5y)N/A
ROICexgc(3y)3.42%
ROICexgc(5y)N/A
ROCE(3y)4.45%
ROCE(5y)N/A
ROICexcg growth 3Y16.71%
ROICexcg growth 5YN/A
ROICexc growth 3Y-2.73%
ROICexc growth 5YN/A
OM growth 3Y3.59%
OM growth 5YN/A
PM growth 3Y-34.57%
PM growth 5YN/A
GM growth 3Y1.67%
GM growth 5YN/A
F-Score4
Asset Turnover0.24
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 4.12 | ||
| Debt/FCF | 19.79 | ||
| Debt/EBITDA | 11.58 | ||
| Cap/Depr | 45.21% | ||
| Cap/Sales | 1.01% | ||
| Interest Coverage | 7.21 | ||
| Cash Conversion | 64.95% | ||
| Profit Quality | 264.23% | ||
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.79 | ||
| Altman-Z | 0.72 |
F-Score4
WACC5.75%
ROIC/WACC0.66
Cap/Depr(3y)90.11%
Cap/Depr(5y)N/A
Cap/Sales(3y)1.52%
Cap/Sales(5y)N/A
Profit Quality(3y)182.81%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-50.72%
EPS 3Y-30.6%
EPS 5YN/A
EPS Q2Q%43.06%
EPS Next Y413.96%
EPS Next 2Y134.38%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)-2.34%
Revenue growth 3Y6.06%
Revenue growth 5YN/A
Sales Q2Q%6.93%
Revenue Next Year1.93%
Revenue Next 2Y3.53%
Revenue Next 3YN/A
Revenue Next 5YN/A
EBIT growth 1Y22.47%
EBIT growth 3Y9.87%
EBIT growth 5YN/A
EBIT Next Year123.43%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y350.36%
FCF growth 3Y38%
FCF growth 5YN/A
OCF growth 1Y223.05%
OCF growth 3Y35.37%
OCF growth 5YN/A