Financial Analysis: RCI Hospitality (RICK) and Jack in the Box (JACK)

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

Profitability

This table compares RCI Hospitality and Jack in the Box’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RCI Hospitality 13.10% 13.75% 6.67%
Jack in the Box 13.96% -23.22% 11.74%

Dividends

RCI Hospitality pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Jack in the Box pays an annual dividend of $1.60 per share and has a dividend yield of 1.9%. RCI Hospitality pays out 5.5% of its earnings in the form of a dividend. Jack in the Box pays out 42.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Volatility & Risk

RCI Hospitality has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Jack in the Box has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500.

Earnings and Valuation

This table compares RCI Hospitality and Jack in the Box’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RCI Hospitality $165.75 million 1.48 $21.71 million $2.18 11.56
Jack in the Box $869.69 million 2.49 $121.37 million $3.79 22.18

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

Insider and Institutional Ownership

48.3% of RCI Hospitality shares are owned by institutional investors. Comparatively, 95.5% of Jack in the Box shares are owned by institutional investors. 7.5% of RCI Hospitality shares are owned by company insiders. Comparatively, 2.3% of Jack in the Box shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for RCI Hospitality and Jack in the Box, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RCI Hospitality 0 0 1 0 3.00
Jack in the Box 0 7 4 0 2.36

RCI Hospitality presently has a consensus target price of $34.00, suggesting a potential upside of 34.92%. Jack in the Box has a consensus target price of $91.56, suggesting a potential upside of 8.93%. Given RCI Hospitality’s stronger consensus rating and higher possible upside, equities research analysts clearly believe RCI Hospitality is more favorable than Jack in the Box.

Summary

Jack in the Box beats RCI Hospitality on 10 of the 16 factors compared between the two stocks.

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 owns 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. It also operates restaurants and sports bars under the Bombshells Restaurant & Bar brand; and dance clubs under the Studio 80 brand. As of December 31, 2018, the company operated approximately 40 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 was formerly known as Rick's Cabaret International, Inc. and changed its name to RCI Hospitality Holdings, Inc. in August 2014. RCI Hospitality Holdings, Inc. was founded in 1983 and is based in Houston, Texas.

About Jack in the Box

Jack in the Box Inc. operates and franchises Jack in the Box quick-service restaurants. As of April 15, 2018, it operated and franchised 2,245 Jack in the Box restaurants primarily in the western and southern United States and Guam. The company was founded in 1951 and is headquartered in San Diego, California.

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