Shares of Rave Restaurant Group Inc (NASDAQ:RAVE) continue to disappoint investors this year, as they have traded to a fresh 52-week low $2.70 on Oct. 7.
This once-high-flying, small-cap stock came into the year at $6.39 and has since lost approximately 56% of its value at current levels.
As you can see from the three-year chart below, shares reached an all-time high of $16.20 on March 12, 2015, but continued losses and changes in management have not been a winning formula for a higher stock price.
The roughly 83% pullback from the lifetime high might be considered a discount, but RAVE would need to stem its losses in future quarters before I would consider committing new money to the stock. In late September, the company reported a loss of 22 cents a share on revenue of $15.7 million. Analysts had expected a 6-cent loss.
That was the third-straight quarterly loss this year, with the company posting losses of 12 cents and 45 cents a share during the prior two quarters. In the year-ago period, the company posted a 5-cent loss per share.
This means that over the past year, RAVE has lost 84 cents a share, or $8.9 million, on revenue just over $60 million.
Rave recently hired a temporary CEO, Clinton Coleman, who replaced Randy Gier. While I had high hopes for its past CEO, its new short-term chief has inherited a mess. A successor could come by year-end, however, as the company has hired a search firm to find a permanent CEO.
Operational issues have severely hurt the company’s bottom line and seem to be affecting sales and enthusiasm for the company’s revolutionary pizza concept.
Good fast-casual food, low prices and a new concept don’t always guarantee success, and the wider-than-expected losses are no excuse for a company that has been in business for decades.
A national ad campaign this fall might help with sales, but investors should avoid the stock until losses improve and revenues start to increase.
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