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Quebec-based MTY Food Group Inc. (market cap $450-million) offers quick service food at about 2,200 locations under 26 different banners, including Taco Time, Country Style and TCBY.
Shares were hit hard after it announced in early April that first-quarter same-store sales declined, but that's created an opportunity to buy a strong business at a good price.
Validea's Martin Zweig-based model likes its strong and accelerating EPS growth – upped EPS by 39.1 per cent in the most recent quarter, which was up from 24.6 per cent on average in the three previous quarters, which was up from long-term rate of 20.8 per cent (using the average of the three-, four-, and five-year growth rates).
It has increased EPS in each year of past decade, which the Warren Buffett-based model likes, and has averaged 23.8 per cent return on equity over past decade (another plus in the Buffett model).
MTY has a debt/equity ratio of just 6.6 per cent, well below food services industry average of 25.3 per cent.
Long-term revenue growth of 26 per cent and earnings growth of 21 per cent far outpace industry averages of 7 per cent and 10 per cent, respectively, yet the stock trades at about the same P/E (20.7) as industry average (20.6).
Click here for Validea's full investing guru report on MTY.