Noble Roman's (NROM) AI Stock Analysis

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Noble Roman's

(OTC:NROM)

67Neutral

Noble Roman's stock is moderately rated due to strong financial performance and technical momentum, despite high valuation concerns and mixed earnings call sentiment. The company's robust cash flow and positive profit margins are its key strengths, but high debt levels and uncertainties in refinancing pose significant risks.

Noble Roman's (NROM) vs. S&P 500 (SPY)

Market Cap

$7.11M

Dividend YieldN/A

Average Volume (3M)16.95K

Price to Earnings (P/E)27.4

Beta (1Y)0.85

Revenue Growth2.90%

EPS Growth-42.06%

CountryUS

Employees36

SectorConsumer Cyclical

Sector Strength60

IndustryRestaurants

Share Statistics

EPS (TTM)0.01

Shares Outstanding22,215,511

10 Day Avg. Volume24,065

30 Day Avg. Volume16,949

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.41

Price to Cash Flow (P/CF)63.70

P/FCF Ratio3.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Noble Roman's Business Overview & Revenue Model

Company DescriptionNoble Roman's, Inc. is a company that operates and franchises a chain of pizza-focused restaurants. The company is primarily involved in the foodservice industry, offering a variety of pizza and related menu items. Noble Roman's focuses on delivering quality pizza products through various formats, including standalone restaurants, non-traditional locations such as convenience stores, entertainment venues, and other foodservice operations.

How the Company Makes MoneyNoble Roman's generates revenue through several key streams. The primary source of income is from its franchising operations, where it collects franchise fees and royalties from franchisees operating under the Noble Roman's brand. Additionally, the company earns revenue from direct sales in its company-owned restaurants. Another significant revenue stream is through the supply of proprietary ingredients and equipment to franchisees and licensees, ensuring consistency in product quality across all locations. Partnerships with various non-traditional venues, such as convenience stores and entertainment centers, also contribute to its revenue by expanding its market presence and customer base.

Noble Roman's Financial Statement Overview

Summary

Noble Roman's demonstrates strong financial health with solid profitability improvements, notably in profit margins and cash flow metrics. However, the high debt-to-equity ratio poses a risk if not managed carefully. Overall, the company is on a positive trajectory due to effective cost management and strong cash generation.

Income Statement

Positive

Noble Roman's shows solid profitability with a significant improvement in both gross profit margin and net profit margin from the previous years. The gross profit margin for 2023 is 35.89%, and the net profit margin stands at 10.15%, a substantial recovery from a negative margin in 2022. Revenue growth is stable, although slightly declining by 0.55% from 2022. The EBIT and EBITDA margins are strong at 25.10% and 27.75%, respectively, indicating effective cost management.

Balance Sheet

Positive

The balance sheet reflects a high debt-to-equity ratio of 5.88, indicating a leveraged position which might pose risks if not managed carefully. However, the company has improved its equity position from the previous year, with an equity growth of 17.38%. Return on equity is strong at 66.65%, showcasing efficient use of shareholder funds. The equity ratio remains low at 11.85%, suggesting limited equity relative to total assets.

Cash Flow

Very Positive

Cash flow is robust with a substantial improvement in free cash flow from negative values in prior years to a positive $1,582,376 in 2023. The operating cash flow to net income ratio is healthy at 1.07, indicating strong cash generation relative to net income. The free cash flow to net income ratio is also positive at 1.08, further supporting the liquidity position.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
14.73M	14.37M	14.45M	13.88M	11.54M	11.70M
	Gross Profit
4.33M	5.16M	3.05M	4.38M	4.41M	4.74M
	EBIT
2.51M	3.61M	427.72K	1.74M	2.31M	1.31M
	EBITDA
2.73M	3.99M	878.27K	3.07M	-1.15M	1.78M
	Net Income Common Stockholders
505.54K	1.46M	-1.06M	509.46K	-5.38M	-378.06K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
76.19K	872.34K	785.52K	1.26M	1.19M	218.13K
	Total Assets
15.68M	18.48M	18.34M	19.38M	18.42M	19.11M
	Total Debt
6.31M	12.89M	14.86M	14.72M	14.32M	9.72M
	Net Debt
6.23M	12.01M	14.08M	13.46M	13.12M	9.50M
	Total Liabilities
7.53M	16.29M	16.48M	16.48M	16.06M	11.27M
	Stockholders Equity
8.15M	2.19M	1.87M	2.89M	2.36M	7.83M
Cash Flow		Free Cash Flow
2.33M	1.58M	-477.99K	69.15K	-408.96K	1.22M
	Operating Cash Flow
2.32M	1.57M	29.58K	1.52M	1.68M	1.51M
	Investing Cash Flow
8.33K	13.82K	-507.57K	-1.45M	-2.08M	-289.35K
	Financing Cash Flow
-1.63M	-1.50M	0.00	1.39B	1.39M	-1.08M

Noble Roman's Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price0.32

Price Trends

50DMA

0.35

Negative

100DMA

0.35

Negative

200DMA

0.35

Negative

Market Momentum

MACD

-0.02

Negative

RSI

46.04

Neutral

STOCH

61.27

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NROM, the sentiment is Neutral. The current price of 0.32 is above the 20-day moving average (MA) of 0.30, below the 50-day MA of 0.35, and below the 200-day MA of 0.35, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 46.04 is Neutral, neither overbought nor oversold. The STOCH value of 61.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NROM.

Noble Roman's Risk Analysis

Noble Roman's disclosed 12 risk factors in its most recent earnings report. Noble Roman's reported the most risks in the “Ability to Sell” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Noble Roman's Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YUM	73 Outperform	$41.26B	28.35	-19.43%	1.84%	6.68%	-7.09%
RAVE	69 Neutral	$35.45M	12.33	21.44%	―	2.83%	37.01%
DPZ	68 Neutral	$15.24B	26.61	-14.74%	1.41%	5.07%	13.74%
NROM	67 Neutral	$7.11M	27.35	9.83%	―	2.90%	-42.06%
PZZA	63 Neutral	$1.19B	14.31	-20.16%	5.06%	-3.57%	2.31%
WING	61 Neutral	$6.48B	62.80	-16.09%	0.44%	36.03%	57.51%
Sector *	59 Neutral	$11.18B	10.04	-1.58%	3.96%	1.31%	-16.97%

* Consumer Cyclical Sector Average

Performance Comparison

NROM

Noble Roman's

0.32

-0.16

-33.33%

DPZ

Domino's Pizza

436.57

-54.99

-11.19%

PZZA

Papa John's International

35.15

-26.57

-43.05%

RAVE

Rave Restaurant Group

2.24

0.06

2.75%

YUM

Yum! Brands

144.93

10.55

7.85%

WING

Wingstop

221.00

-132.15

-37.42%

Noble Roman's Earnings Call Summary

Earnings Call Date: Nov 13, 2024 | % Change Since: -8.57% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant achievements in terms of revenue growth, new location openings, and successful cost management, particularly in labor. However, these were offset by challenges in cost of sales due to high cheese prices, delays in technology integration, ongoing refinancing project challenges, and stagnation in nontraditional store growth. The sentiment is neutral as positive aspects are balanced by notable challenges.

Highlights

Net Income and Operating Income

The third quarter finished with a net income of $193,000 and an operating income of $416,000. The 9-month operating income was a little over $1.4 million.

Same-Store Sales Increase

Craft Pizza & Pubs reported a same-store sales increase of about 1%.

Franchising Revenue Growth

Franchising revenue increased almost 10% for the third quarter and 17% for the 9 months. Royalty income part of revenue for the 9-month period saw an almost 23% increase.

New Locations and Expansion

The company opened 53 new locations so far this year and plans for about 20 more by year's end.

Cash Generation and Debt Reduction

The company made principal payments on current debt of $750,000, purchased equipment for $67,000, and reduced accounts payable and accrued expenses by $820,000, totaling over $1.64 million with only about a $320,000 reduction in cash balance.

Lowlights

High Cheese Prices

Cheese prices were elevated about 25% over the long-run average, affecting the cost of sales.

Technology Integration Delays

The online digital process faced technology hurdles with delays in the integration of the ordering app and loyalty program due to a recent acquisition of the loyalty program provider.

Refinancing Project Delays

The refinancing project is still proceeding but not moving at the desired pace due to external factors.

Nontraditional Store Growth Stagnation

Nontraditional stores showed minimal growth in revenue over the first three quarters despite being way above last year's figures.

Uncertainty in Debt Refinancing Terms

Uncertain interest rates and lack of written commitments from banks have led to moderated language on expected interest savings.

Company Guidance

During the Noble Roman's Q3 2024 earnings call, the executives provided comprehensive guidance on several financial metrics and strategic initiatives. The quarter concluded with a net income of $193,000 and an operating income of $416,000, contributing to a 9-month operating income of over $1.4 million. A noteworthy point was the potential $160,000 increase in net income if the previous revenue recognition method had been used. The Craft Pizza & Pubs segment saw a 1% increase in same-store sales, supported by a 4.8 Google rating and service enhancements like the introduction of service leads. Labor costs were reduced, despite increased management salaries, through strategic task redistribution. Franchising revenues rose by almost 10% for the quarter and 17% for the nine months, with royalty income up nearly 23%. Additionally, 53 new locations were opened this year, with plans for 20 more by year-end. The company also discussed refinancing efforts, with $1.64 million paid towards debt and expenses, while generating significant cash flow. Integration of the POS and online systems was achieved, although challenges with the ordering app and loyalty program integration persist. Lastly, the audit firm was changed to Sassetti for better efficiency and local support.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.