Head-To-Head Comparison: RCI Hospitality Holdings (RICK) & Dave & Buster’s Entertainment (NASDAQ:PLAY)

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

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RCI Hospitality Holdings $135.25 million 1.88 $33.74 million $1.00 26.14
Dave & Buster’s Entertainment $1.05 billion 2.39 $254.99 million $2.36 25.64

Dave & Buster’s Entertainment has higher revenue and earnings than RCI Hospitality Holdings. Dave & Buster’s Entertainment 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.

Analyst Ratings

This is a breakdown of current ratings and price targets for RCI Hospitality Holdings and Dave & Buster’s Entertainment, 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
Dave & Buster’s Entertainment 0 0 9 0 3.00

RCI Hospitality Holdings currently has a consensus price target of $28.50, suggesting a potential upside of 9.03%. Dave & Buster’s Entertainment has a consensus price target of $77.50, suggesting a potential upside of 28.10%. Given Dave & Buster’s Entertainment’s higher possible upside, analysts plainly believe Dave & Buster’s Entertainment is more favorable than RCI Hospitality Holdings.

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 12.0% of its earnings in the form of a dividend.

Volatility and Risk

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

Profitability

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

Net Margins Return on Equity Return on Assets
RCI Hospitality Holdings 7.16% 9.97% 4.77%
Dave & Buster’s Entertainment 9.78% 22.71% 9.34%

Insider & Institutional Ownership

40.3% of RCI Hospitality Holdings shares are held by institutional investors. 6.9% of RCI Hospitality Holdings shares are held by company insiders. Comparatively, 5.6% of Dave & Buster’s Entertainment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Dave & Buster’s Entertainment beats RCI Hospitality Holdings on 11 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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