Reviewing RCI Hospitality (NASDAQ:RICK) & Marcus (NYSE:MCS)

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

Analyst Recommendations

This is a summary of current ratings and price targets for Marcus and RCI Hospitality, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marcus	0	2	3	1	2.83
RCI Hospitality	1	0	1	0	2.00

Marcus currently has a consensus price target of $23.50, indicating a potential upside of 35.81%. RCI Hospitality has a consensus price target of $98.00, indicating a potential upside of 330.96%. Given RCI Hospitality’s higher probable upside, analysts clearly believe RCI Hospitality is more favorable than Marcus.

Dividends

Marcus pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. RCI Hospitality pays an annual dividend of $0.32 per share and has a dividend yield of 1.4%. Marcus pays out 80.0% 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 26.7% of its earnings in the form of a dividend. Marcus has raised its dividend for 2 consecutive years and RCI Hospitality has raised its dividend for 4 consecutive years.

Institutional and Insider Ownership

81.6% of Marcus shares are owned by institutional investors. Comparatively, 53.8% of RCI Hospitality shares are owned by institutional investors. 5.0% of Marcus 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, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Marcus and RCI Hospitality”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marcus	$758.46 million	0.70	$12.69 million	$0.40	43.26
RCI Hospitality	$279.43 million	0.63	$10.81 million	$1.20	18.95

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

Volatility and Risk

Marcus has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500. Comparatively, RCI Hospitality has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Marcus	1.67%	0.46%	0.21%
RCI Hospitality	3.87%	4.05%	1.82%

About Marcus

The Marcus Corporation, together with its subsidiaries, owns and operates movie theatres, and hotels and resorts in the United States. It operates a family entertainment center and multiscreen motion picture theatres under the Big Screen Bistro, Big Screen Bistro Express, BistroPlex, and Movie Tavern by Marcus brand names. The company also owns and operates full-service hotels and resorts, as well as manages full-service hotels, resorts, and other properties. In addition, it provides hospitality management services, including check-in, housekeeping, and maintenance for a vacation ownership development; and manages condominium hotels under long-term management contracts. The Marcus Corporation was founded in 1935 and is headquartered in Milwaukee, Wisconsin.

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.