Critical Analysis: Rave Restaurant Group (RAVE) versus The Competition

Rave Restaurant Group (NASDAQ:RAVE) is one of 382 publicly-traded companies in the “Hotels, Restaurants & Leisure” industry, but how does it contrast to its competitors? We will compare Rave Restaurant Group to similar businesses based on the strength of its valuation, dividends, profitability, risk, analyst recommendations, institutional ownership and earnings.

Volatility and Risk

Rave Restaurant Group has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Rave Restaurant Group’s competitors have a beta of 1.44, suggesting that their average stock price is 44% more volatile than the S&P 500.

Institutional & Insider Ownership

15.1% of Rave Restaurant Group shares are held by institutional investors. Comparatively, 48.7% of shares of all “Hotels, Restaurants & Leisure” companies are held by institutional investors. 28.0% of Rave Restaurant Group shares are held by insiders. Comparatively, 22.3% of shares of all “Hotels, Restaurants & Leisure” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings for Rave Restaurant Group and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rave Restaurant Group	0	1	0	0	2.00
Rave Restaurant Group Competitors	3807	17285	25595	906	2.50

As a group, “Hotels, Restaurants & Leisure” companies have a potential upside of 58.66%. Given Rave Restaurant Group’s competitors stronger consensus rating and higher probable upside, analysts plainly believe Rave Restaurant Group has less favorable growth aspects than its competitors.

Profitability

This table compares Rave Restaurant Group and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rave Restaurant Group	22.29%	17.94%	15.84%
Rave Restaurant Group Competitors	3.93%	-40.66%	2.07%

Valuation and Earnings

This table compares Rave Restaurant Group and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Rave Restaurant Group	$12.91 million	$2.88 million	10.10
Rave Restaurant Group Competitors	$3.43 billion	$250.20 million	-155.62

Rave Restaurant Group’s competitors have higher revenue and earnings than Rave Restaurant Group. Rave Restaurant Group is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Summary

Rave Restaurant Group competitors beat Rave Restaurant Group on 8 of the 13 factors compared.

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.