Reviewing RCI Hospitality Holdings (RICK) & Dave & Buster’s Entertainment (PLAY)

Dave & Buster’s Entertainment (NASDAQ: PLAY) and RCI Hospitality Holdings (NASDAQ:RICK) are both retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, earnings, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Dave & Buster’s Entertainment and RCI Hospitality Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dave & Buster’s Entertainment 0 0 9 0 3.00
RCI Hospitality Holdings 0 0 2 0 3.00

Dave & Buster’s Entertainment currently has a consensus price target of $77.50, suggesting a potential upside of 29.27%. RCI Hospitality Holdings has a consensus price target of $28.50, suggesting a potential upside of 18.36%. Given Dave & Buster’s Entertainment’s higher possible upside, equities research analysts clearly believe Dave & Buster’s Entertainment is more favorable than RCI Hospitality Holdings.

Volatility and Risk

Dave & Buster’s Entertainment has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, RCI Hospitality Holdings has a beta of 0.25, meaning that its stock price is 75% less volatile than the S&P 500.

Profitability

This table compares Dave & Buster’s Entertainment and RCI Hospitality Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dave & Buster’s Entertainment 9.78% 22.71% 9.34%
RCI Hospitality Holdings 7.84% 10.75% 5.08%

Dividends

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

Earnings and Valuation

This table compares Dave & Buster’s Entertainment and RCI Hospitality Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dave & Buster’s Entertainment $1.05 billion 2.37 $254.99 million $2.36 25.40
RCI Hospitality Holdings $138.72 million 1.69 $35.64 million $1.13 21.31

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

Institutional & Insider Ownership

40.4% of RCI Hospitality Holdings shares are owned by institutional investors. 5.6% of Dave & Buster’s Entertainment shares are owned by insiders. Comparatively, 7.6% of RCI Hospitality Holdings shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Dave & Buster’s Entertainment beats RCI Hospitality Holdings on 12 of the 15 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.

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