Preheat oven to 325°F. In a large Dutch oven, cook the bacon over medium heat until crispy. Remove with a slotted spoon and set aside.
Pat beef dry and season generously with salt and pepper. Working in batches, brown the beef in the bacon fat over medium-high heat, about 4 minutes per side. Remove and set aside.
Sprinkle flour over the beef and toss to coat. Pour in the wine and beef broth, scraping up any browned bits from the bottom of the pot.
Stir in the tomato paste, garlic, bay leaves, and thyme. Return the beef and bacon to the pot and bring to a simmer.
Cover and transfer to the oven. Cook for 2 hours, stirring halfway through.
Meanwhile, melt butter in a skillet and sauté the mushrooms until golden, about 6 minutes. Set aside.
After 2 hours, add the carrots and pearl onions to the stew. Return to oven uncovered for 45 minutes until beef and vegetables are tender.
Stir in the sautéed mushrooms, remove bay leaves, and garnish with fresh parsley. Serve over mashed potatoes or egg noodles. The flavors deepen beautifully when refrigerated overnight!