ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Meritage Hospitality Group's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was -1.84%.
As of today (2026-06-25), Meritage Hospitality Group's WACC % is 1.59%. Meritage Hospitality Group's ROIC % is -0.94% (calculated using TTM income statement data).
Meritage Hospitality Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Meritage Hospitality Group (OTCPK:MHGU) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Meritage Hospitality Group's WACC % is 1.59%. Meritage Hospitality Group's ROIC % is -0.94% (calculated using TTM income statement data).
Meritage Hospitality Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
* 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.
For the Restaurants subindustry, Meritage Hospitality Group's ROIC %, along with its competitors' market caps and ROIC % 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 ROIC % vs Restaurants Industry
For the Restaurants industry and Consumer Cyclical sector, Meritage Hospitality Group's ROIC % distribution charts can be found below:
* The bar in red indicates where Meritage Hospitality Group's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* 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.
Meritage Hospitality Group (MHGU) has a ROIC % of -1.84% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Meritage Hospitality Group and its competitors.
Is Meritage Hospitality Group's ROIC % too high?
Meritage Hospitality Group's current ROIC % is -1.84%. 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 ROIC % compare to PETZ and GTIM?
Meritage Hospitality Group's ROIC % of -1.84% can be compared against companies in the Restaurants industry. The industry median ROIC % is 4.21. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Restaurants company?
The median ROIC % among Restaurants companies is 4.21, based on 359 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Meritage Hospitality Group and its competitors. For the Restaurants industry, the median ROIC % is 4.21 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Meritage Hospitality Group's current ROIC % is -1.84%. 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 $17.12, compared to a current price of $2.98 — trading 82.6% below its estimated fair value. The current ROIC % is -1.84%. 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 ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Meritage Hospitality Group (MHGU), the current ROIC % is -1.84% 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 $17.12.
GuruFocus considers Meritage Hospitality Group to be Possible Value Trap.
Key valuation signals for MHGU:
ROIC %: -1.84%
GF Value™: $17.12 vs. price of $2.98 (82.6% below fair value)
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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