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1. Company Snapshot

1.a. Company Description

Rocky Mountain Chocolate Factory, Inc., together with its subsidiaries, operates as a confectionery franchisor, manufacturer, and retail operator.It operates through five segments: Franchising, Manufacturing, Retail Stores, U-Swirl Operations, and Other.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.


As of March 31, 2022, it operated two company-owned, 99 licensee-owned, and 159 franchised Rocky Mountain Chocolate Factory stores operating in 37 states in South Korea, Panama, and the Philippines; three company-owned, and 63 franchised and licensed cafés located in 22 states and Qatar; and self-serve frozen yogurt cafés under the U-Swirl, Yogurtini, CherryBerry, Yogli Mogli Frozen Yogurt, Fuzzy Peach Frozen Yogurt, Let's Yo!, and Aspen Leaf Yogurt brand names.The company has strategic alliance with Edible Arrangements, LLC and its affiliates to provide branded chocolate products.Rocky Mountain Chocolate Factory, Inc.


was founded in 1981 and is headquartered in Durango, Colorado.

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1.b. Last Insights on RMCF

Rocky Mountain Chocolate Factory's recent performance was driven by the successful launch of its first fully redesigned store in Charleston, South Carolina, marking the beginning of a nationwide transformation of the brand. The company's fiscal fourth quarter and fiscal year 2025 financial results, reported on June 17, 2025, likely provided a positive update on the company's operations and financial performance. Additionally, the scheduled conference call on June 18, 2025, to discuss the fiscal fourth quarter and full year 2025 results, indicates the company's commitment to transparency and investor engagement.

1.c. Company Highlights

2. Rocky Mountain Chocolate Factory's Strategic Revamp Bears Fruit

The company's financial performance for the quarter showed a 6.3% increase in total revenue to $6.8 million, compared to $6.4 million in the same period last year. Product sales rose to $5.2 million from $4.9 million, while franchise and royalty fees also saw a modest increase to $1.6 million from $1.5 million. The net loss narrowed to $0.7 million or $0.09 per share, an improvement from the net loss of $0.7 million or $0.11 per share in the second fiscal quarter of '25. The actual EPS came out at -$0.09, which is not directly comparable to the given estimate but indicates an improvement in loss per share.

Publication Date: Oct -28

📋 Highlights
  • Operational Overhaul: New VP of Operations leads warehouse/logistics improvements, aiming for lean inventory and frequent deliveries.
  • Brand Modernization: Refreshed logo, store design, packaging, and mascot elevate brand while retaining legacy appeal.
  • Strategic Acquisition: $165k acquisition of Camarillo, CA store expands Southern California footprint and supports franchise growth.
  • Financial Performance: Q3 revenue rose to $6.8M (+6.3% YoY), net loss at -$0.7M ($0.09/share), improved from -$0.11/share in prior quarter.
  • Franchise Momentum: Increased demand driven by low labor costs and ROI clarity, with new VP of Franchise Development hired to scale system.

Operational Improvements and Franchise Growth

The company has been making significant strides in operational improvements, driven by the new VP of Operations, Luis Burgos, who brings over 30 years of experience in manufacturing and operations. The overhaul of warehouse and logistics operations is expected to ensure lean inventory levels and more frequent delivery to franchise locations. This, combined with the deployment of more technology and automation in the production facility, is aimed at supporting the growing franchise base. As Jeffrey Geygan noted, the relatively low labor model is attractive to prospective franchisees, especially in a rising labor cost environment.

Brand Development and Digital Initiatives

The company has made meaningful progress in evolving the Rocky Mountain Chocolate Factory brand, including a new logo, contemporary store design, and updated packaging. The refreshed look is aimed at elevating the brand while maintaining its warmth, quality, and authenticity. The company is also expanding its digital initiatives, including third-party delivery partnerships with DoorDash, to take its premium offerings beyond the store walls and deepen relationships with franchisees.

Valuation Metrics

With a P/E Ratio of -2.83 and an EV/EBITDA of -5.82, the market is pricing in significant improvement in earnings. The P/S Ratio stands at 0.46, indicating a relatively modest valuation based on revenues. The ROE and ROIC are both negative, reflecting the company's current loss-making position. As the company works towards achieving net positive store growth and improving margins through lower raw material costs, investors will be watching closely to see if these efforts translate into improved financial performance.

Outlook

Management's guidance suggests that they do not expect to burn cash over the next 12 months, a positive sign for the company's financial health. With a strategic focus on franchise development, operational improvements, and brand enhancement, Rocky Mountain Chocolate Factory is positioning itself for long-term growth. The acquisition of a store in Camarillo, California, for $165,000 is expected to be accretive to earnings and provides a physical presence in the important Southern California marketplace.

3. NewsRoom

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Rocky Mountain Chocolate Factory Announces Major Growth Surge with Commitments for 34 New Stores

Nov -25

Source: globenewswire.com

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Reviewing Rocky Mountain Chocolate Factory (NASDAQ:RMCF) & Latitude 360 (OTCMKTS:LATX)

Nov -21

Source: defenseworld.net

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Rocky Mountain Chocolate Factory Celebrates Grand Opening of New Charleston Prototype Store

Nov -12

Source: globenewswire.com

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Renowned Contemporary Artist, Amir H. Fallah, Visits RMCAD to Inspire Next Generation of Creatives

Nov -05

Source: prnewswire.com

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Rocky Mountain Chocolate Factory (NASDAQ:RMCF) & Yum! Brands (NYSE:YUM) Critical Comparison

Nov -03

Source: defenseworld.net

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Rocky Mountain Chocolate Factory to Participate in Upcoming Investor Events

Oct -31

Source: globenewswire.com

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Rocky Mountain Stock Slips Following Q2 Earnings, Net Loss Persists

Oct -17

Source: zacks.com

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Rocky Mountain Chocolate Factory, Inc. (RMCF) Q2 2026 Earnings Call Transcript

Oct -14

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.08%)

6. Segments

Manufacturing

Expected Growth: 4.5%

Growing demand for premium chocolates, increasing popularity of gourmet and artisanal chocolates, and expansion into new markets drive Rocky Mountain Chocolate Factory's growth.

Franchising

Expected Growth: 7.4%

Growing demand for gourmet chocolates, increasing popularity of experiential retail, and expansion into new markets drive growth in the chocolate store franchise industry, supporting Rocky Mountain Chocolate Factory's franchising opportunity.

Retail

Expected Growth: 4.5%

Growing demand for premium chocolates, increasing popularity of gourmet treats, and expansion of company-owned and franchise locations drive Rocky Mountain Chocolate Factory's retail segment growth.

7. Detailed Products

Handcrafted Chocolates

Wide variety of handcrafted chocolates made with the finest ingredients, including nuts, fruits, and creamy caramels.

Caramels

Rich, creamy caramels made with heavy cream, sugar, and a touch of sea salt.

Fudge

Creamy, old-fashioned fudge made with real chocolate, nuts, and other natural ingredients.

Toffees

Crunchy, buttery toffees made with fresh nuts and a touch of sea salt.

Gift Boxes

Assortment of handcrafted chocolates and treats packaged in decorative gift boxes.

Franchising Opportunities

Business opportunity to own and operate a Rocky Mountain Chocolate Factory store.

8. Rocky Mountain Chocolate Factory, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Rocky Mountain Chocolate Factory, Inc. faces moderate threat from substitutes, as consumers have various alternatives for satisfying their sweet tooth, such as baked goods, fruit, or other snack options.

Bargaining Power Of Customers

The bargaining power of customers is relatively low, as individual customers have limited influence over the company's pricing and product offerings.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate, as Rocky Mountain Chocolate Factory, Inc. relies on a few key suppliers for high-quality cocoa and other essential ingredients.

Threat Of New Entrants

The threat of new entrants is relatively low, as entering the premium chocolate market requires significant investment in brand development, marketing, and distribution.

Intensity Of Rivalry

The intensity of rivalry is high, as Rocky Mountain Chocolate Factory, Inc. operates in a competitive market with established players, such as Godiva and Lindt, and faces intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 99.40%
Debt Cost 3.95%
Equity Weight 0.60%
Equity Cost 9.11%
WACC 3.98%
Leverage 16607.68%

11. Quality Control: Rocky Mountain Chocolate Factory, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.65$

Current Price

1.65$

Potential

-0.00%

Expected Cash-Flows