Financial Analysis: Cosi (COSI) vs. RCI Hospitality Holdings (RICK)

RCI Hospitality Holdings (NASDAQ: RICK) and Cosi (NASDAQ:COSI) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Insider & Institutional Ownership

40.4% of RCI Hospitality Holdings shares are owned by institutional investors. Comparatively, 37.6% of Cosi shares are owned by institutional investors. 7.6% of RCI Hospitality Holdings shares are owned by insiders. Comparatively, 7.8% of Cosi shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

RCI Hospitality Holdings pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Cosi does not pay a dividend. RCI Hospitality Holdings pays out 10.6% of its earnings in the form of a dividend.

Volatility & Risk

RCI Hospitality Holdings has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500. Comparatively, Cosi has a beta of -0.67, suggesting that its share price is 167% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for RCI Hospitality Holdings and Cosi, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RCI Hospitality Holdings 0 0 2 0 3.00
Cosi 0 0 0 0 N/A

RCI Hospitality Holdings presently has a consensus target price of $28.50, suggesting a potential upside of 18.36%. Given RCI Hospitality Holdings’ higher probable upside, equities analysts plainly believe RCI Hospitality Holdings is more favorable than Cosi.

Profitability

This table compares RCI Hospitality Holdings and Cosi’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RCI Hospitality Holdings 7.84% 10.75% 5.08%
Cosi -13.67% -96.97% -38.82%

Earnings & Valuation

This table compares RCI Hospitality Holdings and Cosi’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RCI Hospitality Holdings $138.72 million 1.69 $35.64 million $1.13 21.31
Cosi N/A N/A N/A ($0.31) -0.09

RCI Hospitality Holdings has higher revenue and earnings than Cosi. Cosi is trading at a lower price-to-earnings ratio than RCI Hospitality Holdings, indicating that it is currently the more affordable of the two stocks.

Summary

RCI Hospitality Holdings beats Cosi on 10 of the 12 factors compared between the two stocks.

About RCI Hospitality Holdings

With more than 40 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in gentlemen’s clubs and sports bars/restaurants. Clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, and other cities operate under brand names, such as “Rick’s Cabaret,” “XTC,” “Club Onyx,” “Vivid Cabaret,” “Jaguars” and “Tootsie’s Cabaret.” Sports bars/restaurants operate under the brand name “Bombshells Restaurant & Bar.” Investors are attracted by RCI’s strong cash flow, operating margins and local laws that create high barriers to entry in the gentlemen’s club business.

About Cosi

Cosi, Inc. is an international fast casual restaurant company. The Company offers its flatbread. Its menu features made-to-order sandwiches, hand-tossed salads, bowls, breakfast wraps, melts, soups, signature Squagels, artisan flatbread pizzas, S’mores, snacks and desserts. It also offers handcrafted beverages and a variety of coffee-based and specialty beverages. Its sandwiches include tbm, turkey and brie, tuna, turkey avocado and chicken parmesan melt. Its cosi salads are made with fresh ingredients and its own signature dressings. Its soups include tomato basil, turkey chili, smart fit chicken noodle, and mediterranean lentil. Its handcrafted beverages include iced tea, raspberry iced tea, country club iced tea, mojito lemonade, raspberry mojito lemonade. It also offers catering services to its customers. The Company operates in 43 Company-owned and 30 franchise restaurants in fourteen states in the United States, the District of Columbia, Costa Rica and the United Arab Emirates.

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