Franchise Momentum and Digital Scale Drive Profitable Growth – MTY & KITS

Section 1: Introduction

Inflation Report Coverage:

• Inflation report highlights how inflation impacts sectors differently, favoring value and defensive sectors like Energy, Materials, Consumer Staples, Healthcare, Utilities, select Financials, and REITs with inflation-indexed leases, while rate-sensitive sectors like Consumer Discretionary and high-growth Tech typically underperform.
• The report focuses on companies with proven business models, steady financials, high free cash flow, and solid ROE that can pass on costs to customers and protect margins. The aim is to identify stocks that can outperform inflation via capital gains and dividends, supporting diversified sectoral exposure.

Stocks Covered:

• MTY Food Group Inc. (TSX: MTY) reported decent Q4 2025 results with revenue up 7% and normalized EBITDA rising sharply, supported by franchise strength and a one-time gift card breakage adjustment. Free cash flow improved meaningfully, debt was reduced, and net store openings turned positive. A 12% dividend increase and an ongoing strategic review reinforce MTY’s cash-generative, asset-light profile with added optionality.
• KITS Eyecare Ltd. (TSX: KITS) delivered decent Q3 2025 results with revenue up 25% and net income of CAD 1.9 mn, supported by surpassing one million Active Customers and 38% growth in Canada. The company achieved its 12th consecutive quarter of positive Adjusted EBITDA, with margin expansion driven by rising AOV and higher-margin branded products. Decent repeat revenue and disciplined cost control position KITS for scalable, profitable growth.

Section 2: Company Overview

MTY Food Group Inc. (TSX: MTY) is a franchisor in the quick service and casual dining food industry. Its activities consist of franchising and operating corporate-owned locations as well as the sale of retail products under a multitude of banners. The company's operating segment is based on geographical regions namely Canada and US and International. It generates maximum revenue from Canada. The company brands include Big Smoke Burger, Cafe Depot, Country Style, Croissant Plus, Cultures, Extremepita, Fabrika, Jus Jugo Juice, Koya Japan, ManchuWok, Muffin plus, Valentine, Van Houtte, Shushiman and others.

Kalkine’s Inflation Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

Section3:  Financial Highlights

Section 4:  Key Metrics

Below chart depicts the change in Gross Margin, EBITDA Margin, Net Margin, and ROE are based on Q4 2025 and Q4 2024.

Section 5:  Stock Recommendation Summary

Valuation Methodology: EV to Sales Multiple Based Relative Valuation (Illustrative):

The stock has witnessed a downside of ~4.76% and an upside of ~8.78% over the last 1 week and 6 months respectively. Moreover, it is trading above the average 52-week high price of CAD 46.36 and 52-week low price of CAD 32.92, providing an opportunity to ride the trend.

One-Year Technical Price Chart (as of February 26, 2026). Source: REFINITIV, Analysis: Kalkine Group

Section 2: Company Overview

Kits Eyecare Ltd. (TSX: KITS) is an online retailer of contact lenses and eyewear. The company's contact lens partners include Acuvue, Alcon, Bausch & Lomb, Biofinity, CooperVision, and Dailies, and glasses partners include Oakley, Prive Revaux, Ray-Ban, and Tom Ford, which enables us to offer our customers best-in-class brands and products in eye care.

Kalkine’s Inflation Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

Section3:  Financial Highlights

Section 4:  Key Metrics

Below chart depicts the changes in Revenue, Cash Flows from Operating Activities, Gross Profit and Closing Cash and cash equivalents are based on Q3 2024 and Q3 2025.

Section 5:  Stock Recommendation Summary

Valuation Methodology: EV to Sales Multiple Based Relative Valuation (Illustrative):

The stock has witnessed a downside of ~4.98% and an upside ~16.09% over the last 1 week and 3 months respectively. Moreover, it is trading above the average 52-week high price of CAD 22.56 and 52-week low price of CAD 8.55, providing an opportunity to ride the trend.

One-Year Technical Price Chart (as of February 26, 2026). Source: REFINITIV, Analysis: Kalkine Group

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 26, 2026. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.