In case you’ve been keeping track of Canadian client defensive shares these days, you’ve possible seen Maple Leaf Meals (TSX:MFI) inventory making some severe strikes. Final month, the packaged meals inventory surged a formidable 21%, marking its second-best month-to-month efficiency previously 5 years, and caught the eye of progress buyers. However after such a powerful run, ought to buyers think about shopping for shares immediately, or has the chance already handed?

Maple Leaf Meals finds progress stamina

For a lot of the previous few years, Maple Leaf Meals confronted its fair proportion of challenges from provide chain points to fluctuating client demand. However the firm’s newest quarterly outcomes, reported in August, instructed a really totally different story.

The second quarter of 2025 cemented a turnaround triumph for Maple Leaf Meals. Income climbed 8.5%, and the corporate swung dramatically into revenue, with adjusted working earnings leaping 57.2% yr over yr. Much more putting, diluted earnings per share soared from a lack of $0.21 within the second quarter of 2024 to a revenue of $0.46 this yr.

A major a part of this enchancment stems from a lot stronger operational profitability. Maple Leaf’s adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (adjusted EBITDA) margins, a helpful measure of operational profitability, expanded to 13.3% final quarter. This was a serious enchancment from the 5.8% margins seen again in 2022. Higher but, the corporate is now producing vital free money move (FCF), the money left after accounting for capital expenditures. Over the previous 12 months, FCF reached $487 million, a big enchancment from the damaging free money move generated in 2022.

A fortified steadiness sheet

These enhancements have additionally strengthened Maple Leaf’s steadiness sheet. The corporate’s internet debt-to-adjusted EBITDA ratio has dropped to an investment-grade degree of two.1, down from a worrying six in early 2023. Maple Leaf Meals is in a way more financially versatile place immediately.

An thrilling chapter is loading for Maple Leaf Meals inventory buyers

A brand new funding profile is unfolding. Maple Leaf Meals is in superior levels of spinning off its pork enterprise right into a separate publicly traded firm known as Canada Packers. The transaction is greater than a company reshuffle. It’s a strategic transfer that would unlock vital worth for shareholders. The pork division noticed gross sales develop 10.7% final quarter, and as a standalone firm, it is going to be in a position to focus solely on turning into a world chief in pork manufacturing and probably command nice valuation multiples.

Present Maple Leaf shareholders will obtain an 84% stake within the new entity, whereas Maple Leaf itself will retain a 16% possession. Spin-offs usually enable buyers to understand the true worth of every enterprise, and this one seems to be promising.

“Purchase Canadian” motion shifting Maple Leaf earnings?

You could be questioning whether or not Maple Leaf Meals is benefiting from a “Purchase Canadian” pattern, particularly amid current commerce tensions and tariffs. Administration has acknowledged shifting client preferences and has launched advertising and marketing campaigns aligned with patriotic shopping for. Whereas it’s onerous to measure the precise influence, it definitely doesn’t harm.

Valuation

With Maple Leaf inventory buying and selling close to 52-week highs, it’s pure to ask if shares are too costly. MFI inventory’s ahead price-to-earnings (P/E) ratio of 16.1 is in keeping with friends like Premium Manufacturers and Saputo, although larger than the general trade common. Its price-to-free-cash-flow a number of of seven.7 can be above the trade norm. Nevertheless, its enterprise value-to-EBITDA (EV/EBITDA — a valuation measure that compares firm worth, together with debt, to working earnings) of 9.3 seems to be enticing in comparison with the trade common of 14.1.

Can you purchase Maple Leaf inventory for earnings?

Maple Leaf Meals inventory pays a quarterly dividend that yields 2.7% yearly. Extra importantly, the corporate has raised its dividend for 10 consecutive years, together with a 9% improve this yr. With a payout ratio beneath 65%, the dividend seems well-covered and secure.

Investor takeaway

So, is Maple Leaf Meals a purchase after gaining 21% in a month? There’s a powerful case to be made. The dividend inventory stays a prime Canadian client defensive inventory to purchase in September, extra so given its renewed operational power, a compelling company motion underway, and a shareholder-friendly capital-allocation coverage.