Rave Restaurant Group (NASDAQ:RAVE – Get Free Report) and Rocky Mountain Chocolate Factory (NASDAQ:RMCF – Get Free Report) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.
Profitability
This table compares Rave Restaurant Group and Rocky Mountain Chocolate Factory’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Rave Restaurant Group | 23.04% | 19.70% | 17.07% |
| Rocky Mountain Chocolate Factory | -13.62% | -62.48% | -19.16% |
Earnings and Valuation
This table compares Rave Restaurant Group and Rocky Mountain Chocolate Factory”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Rave Restaurant Group | $12.04 million | 3.54 | $2.70 million | $0.20 | 15.00 |
| Rocky Mountain Chocolate Factory | $29.58 million | 0.75 | -$6.12 million | ($0.52) | -4.60 |
Rave Restaurant Group has higher earnings, but lower revenue than Rocky Mountain Chocolate Factory. Rocky Mountain Chocolate Factory is trading at a lower price-to-earnings ratio than Rave Restaurant Group, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Rave Restaurant Group has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500. Comparatively, Rocky Mountain Chocolate Factory has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations for Rave Restaurant Group and Rocky Mountain Chocolate Factory, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Rave Restaurant Group | 0 | 1 | 0 | 0 | 2.00 |
| Rocky Mountain Chocolate Factory | 1 | 0 | 0 | 0 | 1.00 |
Institutional and Insider Ownership
15.1% of Rave Restaurant Group shares are owned by institutional investors. Comparatively, 50.3% of Rocky Mountain Chocolate Factory shares are owned by institutional investors. 28.0% of Rave Restaurant Group shares are owned by insiders. Comparatively, 42.2% of Rocky Mountain Chocolate Factory shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Summary
Rave Restaurant Group beats Rocky Mountain Chocolate Factory on 8 of the 12 factors compared between the two stocks.
About Rave Restaurant Group
Rave Restaurant Group, Inc., together with its subsidiaries, engages in the operation and franchising of pizza buffet, delivery/carry-out (delco), and express restaurants under the Pizza Inn and Pie Five trademarks in the United States and internationally. The company operates through three segments: Pizza Inn Franchising, Pie Five Franchising, and Company-Owned Restaurants. Its buffet restaurants are located in free standing buildings or strip centers in retail developments that offer dine-in, carryout, and catering services, as well as delivery services. The company’s delco restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its Express restaurants serve customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, travel plazas, athletic facilities, or other commercial facilities. The company’s Pizza Inn Express restaurants serve customers through a non-traditional, licensed, pizza-only model called Pizza Inn Express, located at production-oriented facilities. In addition, it operates and franchises fast casual restaurants under the Pie Five Pizza Company or Pie Five trademarks. The company was formerly known as Pizza Inn Holdings, Inc. and changed its name to Rave Restaurant Group, Inc. in January 2015. Rave Restaurant Group, Inc. was founded in 1958 and is based in The Colony, Texas.
About Rocky Mountain Chocolate Factory
Rocky Mountain Chocolate Factory, Inc., together with its subsidiaries, operates as a confectionery franchisor, manufacturer, and retail operator. It operates through Franchising, Manufacturing, Retail Stores, and Other segments. The company produces approximately 400 chocolate candies and other confectionery products, including clusters, caramels, creams, toffees, mints, and truffles; and offers 15 varieties of caramel apples and other products that are prepared in individual stores, as well as provides ice cream, coffee, and other sundries. Rocky Mountain Chocolate Factory, Inc. was founded in 1981 and is headquartered in Durango, Colorado.
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