About RDE, Inc.
RDE, Inc. (Restaurant, Dining and Entertainment) is a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. Founded in 1999, Restaurant.com, Specials by Restaurant.com and the Corporate Incentives division connect digital consumers, businesses and communities offering thousands of dining, retail, and entertainment deal options nationwide at over 184,000 restaurants and retailers.
Restaurant.com prides itself on offering the Best Deal, Every Meal. Restaurant certificates and gift cards allow customers to save at restaurants across the country with just a few clicks. To learn more, visit www.rdeholdings.com/
Investment Highlights:
RSTN is a pioneer in the restaurant deal space and the nation’s largest, and highest profile restaurant-focused digital deals brand. The Company’s reach is huge, with 7.8 million customers and offering dining and merchant deal options at over 184,000 restaurants and retailers.
Although the COVID-19 pandemic has severely hurt restaurants, we believe no other firm stands to benefit more from a return to normalcy in 2021 and beyond than RSTN. Moreover, RSTN could serve as a leading indicator in the consumer economic recovery and is a low-priced, high value, pure play on the restaurant and daily deal segments.
While RSTN is well known as a B2C player the Company is a key marketing campaign provider in the B2B space. The Company works with B2B partners from SMBs up to Fortune 500 companies, including Florida Power & Light, Mercedes Benz and T-Mobile.
RSTN is set to generate substantial revenue growth that far outpaces its peers. We forecast revenue could grow from an estimated $3.6M in 2020 to $14.2M in 2022, averaging a 100% CAGR, and EPS of $0.17 in 2022.
We project RSTN’s stock will reach $7.50 in 6 months, up from $2.00 today. At current levels, RSTN trades 2.8x FY21E revenue, a 57% discount to the 6.6x multiple assigned to the peer group. Led by its enviable sales growth, we believe these shares can trade at 7x next year’s revenue, equating to our $7.50 price target.
Key Statistics
- Price as of 1/15/21 $2.005
- 52 Wk High - Low $2.535 - $0.24
- Est. Shares Outstanding 11.2M
- Market Capitalization $22.5M
- Average Volume 9,019
- Exchange: OTCQB
Forecasts
In 2019, prior to the commencement of the COVID-19 pandemic which has since severely impacted restaurants, Restaurant.com generated $10.6 million in revenue.
For the full year 2020, our model projects $3.6 million in revenue, with an operating loss of ($2.88 million) and a net loss of ($928,000), or a loss per share of ($0.08). It should be noted that despite the difficult economic environment, seasonality exists in the business. As a result, we expect that 4Q20 revenue to be roughly equivalent of the first three quarters combined, which is an extremely positive trend.
As noted above, we believe that revenue growth in 2021 for RSTN could be substantial, as the effect of COVID-19 on the economy improves with the deployment of vaccines and consumers’ desire to return to a sense of normalcy. In addition, it is widely expected that consumers will seek to support local restaurants who have been among the hardest hit by the pandemic and take advantage of dining deals. With limited marketing dollars, partnering with Restaurant.com for dining is a great way for restauranteurs to jump-start their businesses.
For the full-year 2021, we project enviable revenue growth of over 125% from 2020’s likely levels, with sales reaching the $8.1 million mark. While we believe that much of the growth may be back-end loaded, it is our expectation that major sales increases could begin to occur in mid-2Q21. Our model suggests a small operating loss of ($880,000) which could be narrowed with incremental reductions in cost of sales and SG&A, relative to our forecasts.
For 2022, our pro formas suggest revenue of $14.2 million, a jump of around 75%, led by sales growth across the board. We project a strong operating margin of 19.2%, which could make RSTN one of the more profitable companies in the ecommerce deal space. On a fully diluted basis, we estimate EPS of $0.17, or $2.3 million.
