MTY has recovered quite strongly after the headwind of COVID, and is now trading at 17.2x times' Forward P/E. In the last few years, sales growth was quite weak as the company experienced the pandemic and management reduced their acquisition activities significantly, instead prioritizing to deleverage the balance sheet. However, it is encouraging to see management redeploying capital into acquisitions again in recent quarters, which also shows through the reacceleration of revenue growth (MTY grew revenue by 88% in the most recent quarter). The balance sheet is leveraged quite heavily, with net debt of around $1.3B and net debt/EBITDA is around 5.6x. We expect MTY to perform well from this level and would be comfortable owning this today, while being mindful of its debt level. One issue of concern is office vacancies, which can impact its growth rate of existing locations.
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