Meritage Hospitality GroupMHGU +0.90%45 Gross Margin % is 38.58% as of Mar. 2026, which is 10% below its 10-year median of 42.98. GuruFocus rates MHGU with a GF Score™ of 45/100 and a GF Value™ of $17.13 (Possible Value Trap). The stock has 8 warning signs investors should review. Among 359 Restaurants companies, Meritage Hospitality Group ranks worse than 60.72% on this metric.
Meritage Hospitality Group (OTCPK:MHGU) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Meritage Hospitality Group had a gross margin of 38.58% for the quarter that ended in Mar. 2026 => Competition eroding margins
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Meritage Hospitality Group Gross Margin % Related Terms
Meritage Hospitality Group Gross Margin % Historical Data
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
MHGU vs PETZ, GTIM, GENK: Gross Margin % Comparison
For the Restaurants subindustry, Meritage Hospitality Group's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Meritage Hospitality Group Gross Margin % vs Restaurants Industry
For the Restaurants industry and Consumer Cyclical sector, Meritage Hospitality Group's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Meritage Hospitality Group's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Meritage Hospitality Group (MHGU) has a Gross Margin % of 38.58% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Meritage Hospitality Group and its competitors. This is 10% below median its historical median of 42.98. Over the past decade, Meritage Hospitality Group's Gross Margin % has ranged from 38.90 to 44.57. According to the industry distribution chart, Meritage Hospitality Group ranks #218 out of 359 companies in the Restaurants industry, placing it in the top 60.7%.
Is Meritage Hospitality Group's Gross Margin % too high?
Meritage Hospitality Group's current Gross Margin % of 38.58% is 10% below median its 10-year median of 42.98. Over the past 10 years, this metric has ranged from a low of 38.90 to a high of 44.57. The Restaurants industry median Gross Margin % is 45.71. Meritage Hospitality Group's value of 38.58% is 15.6% below this industry median. Based on the distribution chart, Meritage Hospitality Group ranks #218 out of 359 companies in the Restaurants industry, which is below the industry midpoint. Overall, Meritage Hospitality Group has a GF Score™ of 45/100 and is considered Possible Value Trap, reflecting its overall financial health beyond just this single metric.
How does Meritage Hospitality Group's Gross Margin % compare to PETZ and GTIM?
According to the Restaurants industry distribution chart, Meritage Hospitality Group ranks #218 out of 359 companies for Gross Margin %. This places Meritage Hospitality Group in the lower half of its industry. The industry median Gross Margin % is 45.71. Meritage Hospitality Group's value of 38.58% is 15.6% below this benchmark. Historically, Meritage Hospitality Group's own Gross Margin % has ranged from 38.90 to 44.57 over the past decade. While the company's 10-year median is 42.98 vs. the industry median of 45.71, Meritage Hospitality Group has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Restaurants company?
The median Gross Margin % among Restaurants companies is 45.71, based on 359 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Meritage Hospitality Group's current Gross Margin % of 38.58% is 15.6% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Meritage Hospitality Group and its competitors. For the Restaurants industry, the median Gross Margin % is 45.71 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Meritage Hospitality Group's current Gross Margin % is 38.58%, which is 10% below median its own 10-year median of 42.98. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Meritage Hospitality Group stock overvalued right now?
Based on GuruFocus' analysis, Meritage Hospitality Group (MHGU) is currently considered Possible Value Trap. The stock's GF Value™ is $17.13, compared to a current price of $2.98 — trading 82.6% below its estimated fair value. The current Gross Margin % is 38.58%, which is 10% below median its 10-year median of 42.98 and 15.6% below the Restaurants industry median of 45.71. Meritage Hospitality Group's overall GF Score™ is 45/100 with 8 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Meritage Hospitality Group (MHGU), the current Gross Margin % is 38.58% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Meritage Hospitality Group (MHGU) Overvalued in 2026?
Based on GuruFocus' analysis, Meritage Hospitality Group stock appears to be undervalued.
The current stock price of $2.98 is trading 82.6% below its estimated GF Value™ of $17.13.
GuruFocus considers Meritage Hospitality Group to be Possible Value Trap.
Key valuation signals for MHGU:
Gross Margin %: 38.58% (10% below median its 10-year median of 42.98)
GF Value™: $17.13 vs. price of $2.98 (82.6% below fair value)
Industry Position: 15.6% below the Restaurants median (#218 of 359)
No single metric tells the full story. See the MHGU stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Meritage Hospitality Group Inc is engaged in operating quick-service and casual dining restaurants across various states in the United States. It operates Wendy's quick-service restaurants across various states under franchise agreements with its franchisor. It also operates independent restaurants under three concepts throughout Michigan, which include Morning Belle restaurants, Stan's Tacos restaurant, and Blue Porch Bar & Grill restaurant. It is focused on the future development and long-term growth of its Morning Belle brand.
45GF Score
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