Analyzing Nathan’s Famous (NASDAQ:NATH) & RCI Hospitality (NASDAQ:RICK)

Nathan’s Famous (NASDAQ:NATH) and RCI Hospitality (NASDAQ:RICK) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Dividends

Nathan’s Famous pays an annual dividend of $1.00 per share and has a dividend yield of 1.5%. RCI Hospitality pays an annual dividend of $0.12 per share and has a dividend yield of 0.7%. RCI Hospitality pays out 5.5% of its earnings in the form of a dividend.

Volatility and Risk

Nathan’s Famous has a beta of 0.17, indicating that its stock price is 83% less volatile than the S&P 500. Comparatively, RCI Hospitality has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Nathan’s Famous and RCI Hospitality, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nathan’s Famous 0 0 0 0 N/A
RCI Hospitality 0 0 1 0 3.00

RCI Hospitality has a consensus target price of $34.00, suggesting a potential upside of 96.30%. Given RCI Hospitality’s higher possible upside, analysts clearly believe RCI Hospitality is more favorable than Nathan’s Famous.

Profitability

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

Net Margins Return on Equity Return on Assets
Nathan’s Famous 19.44% -15.45% 14.59%
RCI Hospitality 8.15% 14.03% 6.69%

Insider & Institutional Ownership

42.4% of Nathan’s Famous shares are held by institutional investors. Comparatively, 47.9% of RCI Hospitality shares are held by institutional investors. 32.4% of Nathan’s Famous shares are held by company insiders. Comparatively, 7.5% of RCI Hospitality shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Nathan’s Famous and RCI Hospitality’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nathan’s Famous $104.20 million 2.71 $2.63 million N/A N/A
RCI Hospitality $165.75 million 1.01 $21.71 million $2.18 7.94

RCI Hospitality has higher revenue and earnings than Nathan’s Famous.

Nathan’s Famous Company Profile

Nathan's Famous, Inc., together with its subsidiaries, operates in the foodservice industry. The company owns and franchises restaurants under the Nathan's Famous brand name, as well as sells products bearing the Nathan's Famous trademarks through various channels of distribution. It also has license agreements for the manufacture, distribution, marketing, and sale of Nathan's Famous branded hot dogs, sausages, and corned beef products in refrigerated consumer packages to be resold through retail channels, such as supermarkets, groceries, mass merchandisers, and club stores; and other Nathan's Famous branded refrigerated meat products in consumer packages to be resold through retail channels. In addition, the company has license agreements to manufacture Nathan's Famous branded hot dog and sausage products in bulk for use in the food service industry; for supplying Nathan's Famous natural casing and skinless hot dogs in bulk for use in the Nathan's Famous restaurant system; to manufacture proprietary spices; to manufacture and sell various products, including mustard, salsa, sauerkraut, and pickles; to produce and sell French fries and onion rings for retail sale; and to manufacture and sell miniature bagel dogs, franks-in-a-blanket, and other hors d'oeuvres through club stores, supermarkets, and other retail food stores. Further, the company sells Nathan's products directly to end users or to various foodservice distributors, as well as provides Arthur Treacher's brand fish fillets. As of March 25, 2018, its restaurant system consisted of 5 company-owned units in the New York City metropolitan area; and 276 franchised units located in 20 states and 12 foreign countries. Nathan's Famous, Inc. was founded in 1916 and is based in Jericho, New York.

RCI Hospitality Company Profile

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 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 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.

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