MeritValue

Rocky Mountain Chocolate Factory, Inc.

RMCFdata completeness 88%15 fiscal years on file
The thesis, from the filings

Rocky Mountain Chocolate Factory, Inc. earns about -46% on invested capital, but has diluted owners by 32% over 5 years — worth asking whether the growth reaches owners. The cash-flow models don't apply cleanly here — the ledger says why below.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2022FY 2023FY 2024FY 2025FY 2026
Revenue$29.5M1$30.4M1$28M2$29.6M2$27.5M2
Net income−$341,6973−$5.68M3−$4.17M4−$6.12M4−$4.56M4
Operating cash flow$2.86M5−$2.1M5−$2.44M6−$6.6M6−$1.81M6
Capital expenditure$941,3277$1M7$3.02M8$3.76M8$569,0008
Free cash flow (derived)$1.92M5−$3.1M5−$5.45M6−$10.4M6−$2.38M6
Total debt—————
Cash & equivalents$7.59M9$4.72M10$2.08M11$720,00012$1.22M12
Diluted shares6.1M6.2M6.3M7.1M8.1M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$6.47
your share of equity
Profit it earned you last year
−$5.64
Free cash flow it threw off
−$2.94
Debt you’d be carrying
—

10 shares is a claim on $6.47 of net worth that earned you −$5.64 and generated −$2.94 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
-46% avg · 5y
FY22 -3%FY23 -40%FY24 -45%FY25 -72%FY26 -70%

It earned an average -46% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+32% shares · 5y

Share count is up 32% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
DCF · Growth Exit 5Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2022-02-28 · accession 0000950170-24-072997 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2024-02-29 · accession 0001193125-26-248296 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2022-02-28 · accession 0000950170-24-072997 (NetIncomeLoss)
  4. 10-K · period ending 2024-02-29 · accession 0001193125-26-248296 (NetIncomeLoss)
  5. 10-K · period ending 2022-02-28 · accession 0000950170-24-072997 (NetCashProvidedByUsedInOperatingActivities)
  6. 10-K · period ending 2024-02-29 · accession 0001193125-26-248296 (NetCashProvidedByUsedInOperatingActivities)
  7. 10-K · period ending 2022-02-28 · accession 0000950170-24-072997 (PaymentsToAcquirePropertyPlantAndEquipment)
  8. 10-K · period ending 2024-02-29 · accession 0001193125-26-248296 (PaymentsToAcquirePropertyPlantAndEquipment)
  9. 10-K · period ending 2022-02-28 · accession 0001437749-23-016104 (CashAndCashEquivalentsAtCarryingValue)
  10. 10-K · period ending 2023-02-28 · accession 0000950170-24-072997 (CashAndCashEquivalentsAtCarryingValue)
  11. 10-K · period ending 2024-02-29 · accession 0000950170-25-088556 (CashAndCashEquivalentsAtCarryingValue)
  12. 10-K · period ending 2025-02-28 · accession 0001193125-26-248296 (CashAndCashEquivalentsAtCarryingValue)