Corporate Structure

Stock price closed at $5.86, going up slowly. I went on their home page to see if they said anything about their corporate structure and there is not very much. They are an international franchiser and they only put their stores in four locations:
1) Factory Outlet Malls
2) Tourist Areas
3) Regional Malls
4) Street fronts

They have started a new system with kiosk's that are only 250 square feet, of the 300 items that they normally have they have cut it down to around 25 for the kiosks and they make the candy on site. What I found interesting is that 40% of their chocolate is prepared on the premises. It is a little difficult to find information on them, because they have had the same people running the company since it started and it is a small company.

This is why every time that I am in an airport I will find a RMCF and have dark chocolate covered strawberries, there is nothing like it right before you have to fly.

Competitor gets ahead & falling stock prices

RMCF's stock is not immune to the massive drop in the stock market. Today they closed at $5.69 and all of the candy manufacturers have an opportunity to follow Nestle's example.

Nestle UK is the first company to cut excess plastic out of their easter egg candy packaging. They reduced packaging by 30% which will decrease all of the easter candy plastic by 4500 tons a year. This is huge, because customers do want to be greener. I know that I am always looking at companies that have efficient products or that have less waste. When I buy my easter candy for my granddaughters I will buy Nestle, because of this fact. http://www.thepress.co.uk/news/4142552.York_Nestl___factory_driven_by_chocolate_profits/

This was an article that I found and it was printed on February 3rd. Everyone thinks that the chocolate industry is recession proof, but they have been having problems also. What is so interesting is that these problems are part of the SWOT analysis that we did this past week. There are giants in the chocolate industry: Hershey, Nestle, Cadbury, and Tootsie, but RMCF has been able to carve out a niche for themselves. They make $20-$30million in revenue a year, it is nothing like Hershey's $5 Billion, but they survive and this is a Strength. The big threats right now are the prices of cocoa, milk and other ingredients they need for making their product. Then consumers are not spending the money they were before and distribution costs have increased. I talked about their weaknesses earlier and it is the diversity with their Board members, there is none. They have the opportunity to stay under the radar of the big chocolate industry leaders, and continue to carve out their niche. Oh, by the way the stock took a nose dive and closed Friday 20th at $5.61.
http://community.investopedia.com/news/IA/2009/A-Slightly-Sweeter-Hershey-HSY-CBY-NSRGY0203.aspx?partner=YahooSA

Stock Price

Stock price ended yesterday at $6.55. I think that it will go up, I saw a video on MSN and they talked about how chocolate is recession proof, because everyone always wants chocolate. This includes myself, I look for excellent dark chocolate, anyway this guy on MSN said that people need to buy stock in the chocolate companies. We will see if people follow this advise or not.

Hershey

The Hershey Company nonexecutive Chairman Kenneth Wolfe resigned today to be replaced by James Nevels. Wolfe was only on the Board since 2007.

RMCF had a press release today that stated they were going to pay a fourth quarter dividend of $.10 per share. This is found at http://www.news.moneycentral.msn.com/ticker/article.aspx?Feed=PR&Date=20090217&ID=9615060&Symbol=RMCF

At this time of day there stock price is increasing, which is different than everyone else in the industry because their stock price is declining.

Stock Price

$7.05

They are keeping their stock price pretty even over the long run.

Financials

Yesterday we talked about different financial ratios, so I went to edgar and these numbers are from the last quarter that ended in Nov. 08.

Profit Margin 21.99%
ROA 21.99%
ROE 28.52%
Revenue $29.08 million
Qtrly revenue growth -15.10% EPS is $.646 industry = $.65
Total Cash $343.21 thousand Gross Margin = 38.58% Industry=32.59%
Current Ratio 2.835
Operating Cash Flow $4.45 million
Outstanding Shares 5.99 million
Highest Stock Price was on 3-7-08 $13.29

The industry ROE = 9.20%

Market Cap.
Cadbury $56.6 Billion
The Hershey Company $8.4 Billion
Tootsie Roll $1.3 Billion
Imperial Sugar Company $123.8 Billion
RMCF $41 Million
Industry Average is $1.01 Billion

Even though Hershey is leading the industry and they have the largest market share RMCF has good financials.