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

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RCI Hospitality Holdings $135.25 million 1.69 $33.74 million $1.00 23.57
Dave & Buster’s Entertainment $1.05 billion 2.42 $254.99 million $2.36 25.96

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.

Analyst Ratings

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

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 target price of $28.50, indicating a potential upside of 20.92%. Dave & Buster’s Entertainment has a consensus target price of $77.50, indicating a potential upside of 26.51%. Given Dave & Buster’s Entertainment’s higher possible upside, analysts clearly 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.

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%

Risk and Volatility

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

Institutional & Insider 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 large money managers, hedge funds and endowments believe a company 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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