Head-To-Head Review: RCI Hospitality (NASDAQ:RICK) and Carnival (NYSE:CCL)

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

Dividends

Carnival pays an annual dividend of $2.00 per share and has a dividend yield of 7.4%. RCI Hospitality pays an annual dividend of $0.28 per share and has a dividend yield of 1.1%. Carnival pays out 104.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RCI Hospitality pays out 15.1% of its earnings in the form of a dividend. RCI Hospitality has increased its dividend for 4 consecutive years.

Risk and Volatility

Carnival has a beta of 2.67, meaning that its share price is 167% more volatile than the S&P 500. Comparatively, RCI Hospitality has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Carnival and RCI Hospitality, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carnival	0	8	17	1	2.73
RCI Hospitality	1	0	1	0	2.00

Carnival presently has a consensus target price of $33.00, indicating a potential upside of 21.81%. RCI Hospitality has a consensus target price of $98.00, indicating a potential upside of 297.89%. Given RCI Hospitality’s higher possible upside, analysts plainly believe RCI Hospitality is more favorable than Carnival.

Earnings & Valuation

This table compares Carnival and RCI Hospitality”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carnival	$26.23 billion	1.21	$1.92 billion	$1.92	14.11
RCI Hospitality	$281.74 million	0.76	$3.01 million	$1.86	13.24

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Carnival	10.07%	27.86%	5.64%
RCI Hospitality	5.88%	6.19%	2.81%

Institutional & Insider Ownership

67.2% of Carnival shares are owned by institutional investors. Comparatively, 53.8% of RCI Hospitality shares are owned by institutional investors. 7.6% of Carnival shares are owned by company insiders. Comparatively, 9.6% of RCI Hospitality shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Carnival beats RCI Hospitality on 14 of the 18 factors compared between the two stocks.

About Carnival

Carnival Corp. engages in the operation of cruise ships. It operates through the following business segments: North America and Australia (NAA) Cruise, Europe and Asia (EA) Cruise Operations, Cruise Support, and Tour and Others. The North America and Australia (NAA) Cruise segment includes the Carnival Cruise Line, Holland America Line, Princess Cruises, and Seabourn. The Europe and Asia (EA) Cruise Operations segment consists of AIDA, Costa, Cunard, and P&O Cruises (UK). The Cruise Support segment represents port destinations and private islands for the benefit of its cruise brands. The Tour and Other segment operates hotel and transportation operations of Holland America Princess Alaska Tours. The company was founded in 1972 and is headquartered in Miami, FL.

About RCI Hospitality

RCI Hospitality Holdings, Inc., through its subsidiaries, engages in the hospitality and related businesses in the United States. It operates in Nightclubs, Bombshells, and Media Group segments. The company’s wholly-owned subsidiaries own and/or operates upscale adult nightclubs serving primarily businessmen and professionals under the Rick's Cabaret, Jaguars Club, Tootsie's Cabaret, XTC Cabaret, Club Onyx, Hoops Cabaret and Sports Bar, Scarlett's Cabaret, Temptations Adult Cabaret, Foxy's Cabaret, Vivid Cabaret, Downtown Cabaret, Cabaret East, The Seville, Silver City Cabaret, and Kappa Men's Club. Wholly-owned subsidiaries also operate restaurants and sports bars under the Bombshells Restaurant & Bar brand; and dance clubs under the Studio 80 brand. As of February 11, 2019, the company operated 46 units, including 39 nightclub units and 7 Bombshell units. In addition, it owns two national industry trade publications serving the adult nightclubs industry and the adult retail products industry; a national industry convention and tradeshow; and two national industry award shows, as well as approximately a dozen industry and social media Websites. The company founded in 1983 as Rick's Cabaret International, Inc., changed its name to RCI Hospitality Holdings, Inc. in August 2014, and is based in Houston, Texas.