2 TSX restaurant stocks as sales jump in food & drinking subsector

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2 TSX restaurant stocks as sales jump in food & drinking subsector

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2 TSX restaurant stocks as sales jump in food & drinking subsector
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Highlights

  • Statistics Canada recently reported that the sales of food services and drinking places expanded by 6.5 per cent in March.
  • The agency added that March’s sales even surpassed pre-pandemic levels on an annual basis.
  • Stocks of MTY Food Group galloped by over six per cent in the last week.

Statistics Canada recently reported that the sales of food services and drinking places expanded by 6.5 per cent to C$ 6.8 billion in March 2022 on a seasonally adjusted basis, supported by eased COVID rules across the nation. The agency added that March’s sales even surpassed pre-pandemic levels on an annual basis due to easing COVID rules.

The StatCan report also stated that March 2022 sales in this subsector swelled higher than pandemic levels (on an annual basis).

With these increasing sales numbers in the food services and drinking subsector, let us look at two Canadian restaurant companies.

Restaurant Brands International Inc (TSX: QSR)

Restaurant Brands' Tim Hortons and Burger King saw a notable surge of 12.9 per cent and 16.5 per cent, respectively, in system-wide sales in the first three months of FY2022. The Canadian restaurant chain also posted increased total sales revenue of US$ 1.45 billion in the latest quarter, higher than C$ 1.26 billion recorded in Q1 2021. However, net profit still plunged to US$ 270 million in Q1 2022 compared to US$ 271 million earned in Q1 2021.

QSR stock, however, has plummeted by almost 23 per cent in 12 months and was about three per cent above its 52-week low of C$ 63.45 (May 20). As per Refinitiv data, RQS's Relative Strength Index (RSI) value of 39.93 on June 1.

 Restaurant Brands (TSX: QSR)’s Q1FY2022 results

Also read: Tonix (TNXP) stock soars after monkeypox-related patent. Buy call?

MTY Food Group Inc (TSX: MTY)

MTY Food Group said that its revenue rose by 18 per cent to US$ 140.49 million in Q1 FY2022, supported by growing recurring revenue streams from its franchises (up by 54 per cent) and food revenues (up by 27 per cent) compared to Q1 2021.

Stocks of MTY Food Group galloped by over six per cent in the last week and held a moderate RSI value of 53.82 on June 1, suggests Refinitiv findings.

Also read: WSP to acquire Wood’s Environment and Infrastructure unit. Buy alert?

Bottomline

While easing COVID curbs may be helping companies engaged in the food services and drinking businesses, economic factors like mounting inflation and higher borrowing costs could also impact its operational growth. Hence, investors should get an overview of all the possible macroeconomic and microeconomic factors that are in play before concluding any investment decisions.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks. 

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