RCI Hospitality Holdings (NASDAQ:RICK) & Cosi (COSI) Critical Analysis

RCI Hospitality Holdings (NASDAQ: RICK) and Cosi (NASDAQ:COSI) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and target prices for RCI Hospitality Holdings and Cosi, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RCI Hospitality Holdings 0 0 2 0 3.00
Cosi 0 0 0 0 N/A

RCI Hospitality Holdings currently has a consensus price target of $28.50, suggesting a potential upside of 18.36%. Given RCI Hospitality Holdings’ higher probable upside, research analysts plainly believe RCI Hospitality Holdings is more favorable than Cosi.

Volatility & Risk

RCI Hospitality Holdings has a beta of 0.25, suggesting that its stock price is 75% less volatile than the S&P 500. Comparatively, Cosi has a beta of -0.67, suggesting that its stock price is 167% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
RCI Hospitality Holdings 7.84% 10.75% 5.08%
Cosi -13.67% -96.97% -38.82%

Institutional and Insider Ownership

40.4% of RCI Hospitality Holdings shares are owned by institutional investors. Comparatively, 37.6% of Cosi shares are owned by institutional investors. 7.6% of RCI Hospitality Holdings shares are owned by insiders. Comparatively, 7.8% of Cosi shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

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

Earnings & Valuation

This table compares RCI Hospitality Holdings and Cosi’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RCI Hospitality Holdings $138.72 million 1.69 $35.64 million $1.13 21.31
Cosi N/A N/A N/A ($0.31) -0.09

RCI Hospitality Holdings has higher revenue and earnings than Cosi. Cosi 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.

Summary

RCI Hospitality Holdings beats Cosi on 10 of the 12 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.

About Cosi

Cosi, Inc. is an international fast casual restaurant company. The Company offers its flatbread. Its menu features made-to-order sandwiches, hand-tossed salads, bowls, breakfast wraps, melts, soups, signature Squagels, artisan flatbread pizzas, S’mores, snacks and desserts. It also offers handcrafted beverages and a variety of coffee-based and specialty beverages. Its sandwiches include tbm, turkey and brie, tuna, turkey avocado and chicken parmesan melt. Its cosi salads are made with fresh ingredients and its own signature dressings. Its soups include tomato basil, turkey chili, smart fit chicken noodle, and mediterranean lentil. Its handcrafted beverages include iced tea, raspberry iced tea, country club iced tea, mojito lemonade, raspberry mojito lemonade. It also offers catering services to its customers. The Company operates in 43 Company-owned and 30 franchise restaurants in fourteen states in the United States, the District of Columbia, Costa Rica and the United Arab Emirates.

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