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DAVE 10-K Analysis
Very small cap stocks can be diamond in the rough, and I decided to take a look at DAVE stock 10-K.
DAVE is the stock behind the restaurants chain “Famous Dave’s”. The market cap is very small (some would say micro) at $50M. The 10-K for the year 2018 was filed on March 4th, 2019.
2018 was not a growth year, the number of restaurants for the chain fell from 150 to 144 in 2018, a 4% decline. Total revenue fell from $64,595K to $54,888K, a 15% decrease.
The company explains the steep decline in Restaurant sales (22.1%) by the closure of 14 company-owned restaurants since January 2nd, 2017. Indeed, at the start of 2017, there were 176 restaurants, and a lot of restaurants closed during 2017, which makes the year on year comparison hard.
I believe the company should provide better details on same-store sales. Their claim is that for company-owned restaurants, the same-store sales increased by 2.7%, but decreased by 1.4$ for franchise operated restaurants.
Most of the revenues come from the company owned restaurants. Company restaurants have more revenues but also more cost of operation. I assume the drastic decrease in restaurants made the company only pick the high performing ones, hence the increase of 2.7% of same-store sales year-on-year.