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Category: Stock Market and Rave Restaurant Group
Date: 30 September 2019 Stock Price: $2.76 We take a look at the 4th quarter (full fiscal year) earnings release of their 2019 fiscal year of Rave Restaurant Group, the owner of Pie Five and Pizza Inn franchise restaurants.
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About Rave Restaurant Group
Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates and franchises Pie Five and Pizza Inn restaurants domestically and internationally. Pie Five Pizza Co. is the leading brand in the rapidly growing fast-casual pizza space, offering individually handcrafted pizzas made to order with fresh ingredients in less than five minutes. Pizza Inn is an international chain featuring freshly made pizzas, along with salads, pasta, and desserts.
In 1958, two Texas brothers, Joe and R. L. Spillman, opened the first Pizza Inn across from Southern Methodist University in Dallas. Pizza Inn awarded the first franchise in 1963 and opened the first buffet restaurant in 1969. International franchising began in the late 1970s. In 1993, Pizza Inn Holdings, Inc. began trading on the NASDAQ Stock Market under the ticker symbol "PZZI."
For almost 60 years, Pizza Inn has been America’s HOmetown Pizza Place. The nostalgic brand known for its pizza has recorded four consecutive quarters of growth and is building the infrastructure to support consistent growth and performance.
In June 2011, we opened the first Pie Five Pizza Co. restaurant in Ft. Worth, Texas. Pie Five began franchising in 2013. Named among Fast Casual’s Top “Movers & Shakers” for three consecutive years, 2015 “Best Franchise Deal” by QSR Magazine, 2012 Hot Concepts winner by Nation’s Restaurant News and one of “10 Hot New Restaurant Chains from Established Brands” by Forbes.com. In January 2015, Pizza Inn Holdings, Inc. became Rave Restaurant Group. RAVE is a reflection of the company’s transformation from a single-branded restaurant company to a multi-brand portfolio group comprised of world-class restaurant operators. Rave Restaurant Group is traded on the NASDAQ Stock Market under the ticker symbol “RAVE”.
In 1958, two Texas brothers, Joe and R. L. Spillman, opened the first Pizza Inn across from Southern Methodist University in Dallas. Pizza Inn awarded the first franchise in 1963 and opened the first buffet restaurant in 1969. International franchising began in the late 1970s. In 1993, Pizza Inn Holdings, Inc. began trading on the NASDAQ Stock Market under the ticker symbol "PZZI."
For almost 60 years, Pizza Inn has been America’s HOmetown Pizza Place. The nostalgic brand known for its pizza has recorded four consecutive quarters of growth and is building the infrastructure to support consistent growth and performance.
In June 2011, we opened the first Pie Five Pizza Co. restaurant in Ft. Worth, Texas. Pie Five began franchising in 2013. Named among Fast Casual’s Top “Movers & Shakers” for three consecutive years, 2015 “Best Franchise Deal” by QSR Magazine, 2012 Hot Concepts winner by Nation’s Restaurant News and one of “10 Hot New Restaurant Chains from Established Brands” by Forbes.com. In January 2015, Pizza Inn Holdings, Inc. became Rave Restaurant Group. RAVE is a reflection of the company’s transformation from a single-branded restaurant company to a multi-brand portfolio group comprised of world-class restaurant operators. Rave Restaurant Group is traded on the NASDAQ Stock Market under the ticker symbol “RAVE”.
Overview of Rave Restaurant Group's latest earnings report
- Revenue: $12.319 million (down from $15.120 million from the same period of the previous year)
- Revenue decreased by -18.52% over the last 12 months
- Total cost and expenses: $13.120 million (down from $16.168 million for the same period of the previous year)
- Total cost and expenses decreased by -18.85% over the last 12 months
- Net loss $750 thousand (down from a profit of $$1.912 million for the same period of the previous year)
- Diluted loss per share: -$0.05 (down from $0.14 for the same period of the previous year)
- Diluted weighted-average shares outstanding: 15.070 million (up from 14.983 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.264 million
- Cash and cash equivalents per share: $0.15
- Cash and cash equivalents makes up 5.44% of Rave Restaurant Group's market capital
- Cash and cash equivalents makes up 21.71% of Rave Restaurant Group's total assets
- Accounts receivable: $1.191 million
- Accounts receivable makes up 11.4% of Rave Restaurant Group's total assets
- Stockholders equity in Rave Restaurant Group's : $4.434 million
- Stockholders equity per share for Rave Restaurant Group: $0.29
- Rave Restaurant Group's is trading at 9.51 times its stockholders equity per share, which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- Cash provided by operating activities: $659 thousand
- Cash provided by operating activities per share: $0.043
Rave's management commentary on the results and earnings guidance
DALLAS, Sept. 30, 2019 /PRNewswire/ -- RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the fourth quarter and fiscal year ended June 30, 2019.
"Last quarter, we continued to make important improvements in leadership and overall strategy at both RAVE brands," said Bob Bafundo, President of RAVE Restaurant Group. "We continue to focus on the two primary levers for our business – growing same-store sales and adding new restaurants. By adding the right talent and growing each brand, we believe we are clearly setting the path for future success."
Fourth Quarter Fiscal 2019 Operating Results
Pizza Inn total domestic and comparable store retail sales increased by 0.8% and 2.2%, respectively, during the fourth quarter of fiscal 2019 compared to the same period of the prior year. "Pizza Inn had another positive quarter," said Bafundo. "We've made tremendous progress and have seen exceptional results from our strategy of aligning with franchisees on brand objectives and improving communication across the system. In addition, initiatives such as all-day buffet and restaurant remodels continue to drive sales and traffic growth. We are proud of the renewed excitement around this brand and look forward to additional successes in 2020."
Pie Five total domestic and comparable store retail sales decreased by 22.1% and 7.3%, respectively, for the fourth quarter of fiscal 2019 compared to the same period of the prior year. "To improve service consistency and operational efficiency at Pie Five, we've added Scott Black to the team as our new Vice President of Operations," said Bafundo. "Scott has a proven track record of success with over 30 years of experience in the food and beverage industry, specifically in the pizza segment and as a restaurant owner. Scott is assisting us in sharpening our distinctive service model to create a guest experience that capitalizes on the customization, approachability, and speed of dining with Pie Five."
Development Review
During the fourth quarter of fiscal 2019, Pizza Inn domestic unit count including PIE decreased by one. "With existing franchisees signing on for multi-unit development agreements, Pizza Inn is now outperforming our recent pace of development," said Bafundo. "It's exciting to see our legacy brand growing again and we expect new development to keep the pipeline full for the coming quarters."
The Company continued its rollout of Pizza Inn Express, or PIE, that debuted in 2018 with one new opening in the fourth quarter of fiscal 2019 bringing the unit count to nine at the end of the quarter. "As one of the only restaurant-branded concepts in the convenience store space, PIE continues to gain traction," said Bafundo. "Only 18 months ago, we started with a blank slate and took a year to develop this non-traditional model and define operational systems. Today, we have a concept that provides a seamless customer experience with the same quality pizza found in our traditional locations. The development opportunities for this concept are both promising and significant."
In the fourth quarter of fiscal 2019, Pie Five opened one new domestic unit, closed four domestic units and transferred one Company-owned unit to a franchisee, bringing the domestic unit count to 58 restaurants at the end of the quarter. "We continue to experience strong interest in Pie Five," said Bafundo. "With our Goldilocks model, we have lowered the new store development investment as well as ongoing occupancy costs. This strategy has begun to show positive results in improving restaurant fundamentals. Non-traditional development is surpassing projections and, as we leverage these opportunities, we expect this success to continue."
"Last quarter, we continued to make important improvements in leadership and overall strategy at both RAVE brands," said Bob Bafundo, President of RAVE Restaurant Group. "We continue to focus on the two primary levers for our business – growing same-store sales and adding new restaurants. By adding the right talent and growing each brand, we believe we are clearly setting the path for future success."
Fourth Quarter Fiscal 2019 Operating Results
Pizza Inn total domestic and comparable store retail sales increased by 0.8% and 2.2%, respectively, during the fourth quarter of fiscal 2019 compared to the same period of the prior year. "Pizza Inn had another positive quarter," said Bafundo. "We've made tremendous progress and have seen exceptional results from our strategy of aligning with franchisees on brand objectives and improving communication across the system. In addition, initiatives such as all-day buffet and restaurant remodels continue to drive sales and traffic growth. We are proud of the renewed excitement around this brand and look forward to additional successes in 2020."
Pie Five total domestic and comparable store retail sales decreased by 22.1% and 7.3%, respectively, for the fourth quarter of fiscal 2019 compared to the same period of the prior year. "To improve service consistency and operational efficiency at Pie Five, we've added Scott Black to the team as our new Vice President of Operations," said Bafundo. "Scott has a proven track record of success with over 30 years of experience in the food and beverage industry, specifically in the pizza segment and as a restaurant owner. Scott is assisting us in sharpening our distinctive service model to create a guest experience that capitalizes on the customization, approachability, and speed of dining with Pie Five."
Development Review
During the fourth quarter of fiscal 2019, Pizza Inn domestic unit count including PIE decreased by one. "With existing franchisees signing on for multi-unit development agreements, Pizza Inn is now outperforming our recent pace of development," said Bafundo. "It's exciting to see our legacy brand growing again and we expect new development to keep the pipeline full for the coming quarters."
The Company continued its rollout of Pizza Inn Express, or PIE, that debuted in 2018 with one new opening in the fourth quarter of fiscal 2019 bringing the unit count to nine at the end of the quarter. "As one of the only restaurant-branded concepts in the convenience store space, PIE continues to gain traction," said Bafundo. "Only 18 months ago, we started with a blank slate and took a year to develop this non-traditional model and define operational systems. Today, we have a concept that provides a seamless customer experience with the same quality pizza found in our traditional locations. The development opportunities for this concept are both promising and significant."
In the fourth quarter of fiscal 2019, Pie Five opened one new domestic unit, closed four domestic units and transferred one Company-owned unit to a franchisee, bringing the domestic unit count to 58 restaurants at the end of the quarter. "We continue to experience strong interest in Pie Five," said Bafundo. "With our Goldilocks model, we have lowered the new store development investment as well as ongoing occupancy costs. This strategy has begun to show positive results in improving restaurant fundamentals. Non-traditional development is surpassing projections and, as we leverage these opportunities, we expect this success to continue."
Rave Restaurant Group (NASDAQ: RAVE) stock price history
The image below, obtained from Google, shows the stock price history of Rave Restaurant Group (NASDAQ: RAVE) over the last 5 years. And it's been a horrible time for stockholders of Rave Restaurant Group. 5 years ago the stock was trading at around $6.60 and its currently trading at $2.72. That's a very negative return of -58.18% return provided by Rave Restaurant Group over the last 5 years. The stock of Rave Restaurant Group is also trading at a little closer to its 52 week high than it is to its 52 week high, which is an indication to us that the short term sentiment and momentum of Rave Restaurant Group stock is modestly positive.
Rave Restaurant Group (NASDAQ: RAVE) latest stock valuation
So what is Rave Restaurant Group's (NASDAQ: RAVE) stock worth based on the release of their latest earnings report? Based on the earnings reported our valuation models provide a target (full value) price for Rave Restaurant Group of $2.30 a stock. We therefore believe that Rave Restaurant Group's stock is overvalued at this point in time. We usually recommend long term fundamental or value investors buy into a stock at least 10% below our target (full value) price, which in this case is $2.30, which would make a good entry point $2.07 or below. We cannot see the stock of Rave Restaurant Group going up anytime soon. Demand for the group's product needs to increase first before we would recommend investing in the company. We expect the stock to continue its downward slide in coming weeks and months to levels closer to our target (full value) price of $2.30