RAVE - Tracking the Pizza Bull
RAVE FY 2024 EPS +70% YOY Despite Weak Sector Sentiment
Rave Restaurant Group published its annual results for the year ending June 2024 this week. For contextThe annual results show little revenue growth (+3%) but a massive profitability jump (+50%). The shares jumped 20% on the day of the announcement. Cash and equivalents are now at 25% of market capitalization. The company also reported on its efforts to grow the Pizza Inn brand. This post discusses the results, the company’s repositioning for growth, and why my original bull case is still a plausible scenario., please check my earlier articles on this nano-cap Pizza franchise.
The annual results show little growth in revenue (+3%) but a massive jump in net income (+50%). The shares jumped 20% on the day of the announcement. Cash and equivalents are now at 25% of market capitalization. The company reported also its progress of growing the Pizza Inn brand. This post discusses the results, the company’s repositioning for growth, and why my orignal bull case is still plausible.
Outline
TL;DR
Equity Summary
Q4 and FY results
Repositioning the Business for Growth
Other Indications from the Company
Comparison With Original Bull Case
Thoughts
Conclusion
TL;DR
The results are (still) sufficiently close to my bull case scenario.
Low revenue growth, but expenses down → strong earnings growth. However, revenue growth needs to pick up in the future to make this investment journey really rewarding.
Cash & equivalents grow to 25% of market capitalization. Thus, RAVE 0.00%↑ appears very well protected in case the wider restaurant sector, or even a recession is in the cards.
The net-cash company trades at 12.5 x EPS and 7.5 x adjusted EBITDA.