Assessing RAVE Restaurant Group Inc’s (NASDAQ:RAVE) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess RAVE’s recent performance announced on 24 September 2017 and evaluate these figures to its long-term trend and industry movements. Check out our latest analysis for RAVE Restaurant Group
Was RAVE’s recent earnings decline worse than the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to examine various companies on a similar basis, using the latest information. For RAVE Restaurant Group, its most recent bottom-line is -$11.1M, which compared to the previous year’s level, has become more negative. Since these figures may be fairly short-term, I’ve estimated an annualized five-year figure for RAVE’s earnings, which stands at -$3.3M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.
Additionally, we can analyze RAVE Restaurant Group’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has risen by a mere 6.43%. Given that top-line growth is also pretty flat, the key to profitability in the future would be controlling costs. Scanning growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 13.57% over the previous year, and 10.94% over the previous five years. This shows that whatever uplift the industry is enjoying, RAVE Restaurant Group has not been able to gain as much as its average peer.
What does this mean?
RAVE Restaurant Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues RAVE Restaurant Group may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research RAVE Restaurant Group to get a better picture of the stock by looking at:
1. Financial Health: Is RAVE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.