Review of A & W Food Services of Canada

FEB 13, 2025 - AW possessed an impressive operational profile with a track record of strong same-store-sales growth and healthy store count expansion. The strategic transaction of converting to a corporation transformed AW into a more compelling investment story. AW now, not only has an attractive dividend yield, but is also a growth-focused company that offers decent upside potential from capital appreciation as the company expands the burger chain. In addition, this transition could attract institutional ownership and research analyst coverage, which could help improve the company’s valuation. AW also prioritizes balance sheet optimization, which balances between maintaining a dividend and optimizing the capital structure to create shareholder value. We are initiating our rating at a “B”.