We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Must Consider RICK Stock for Their Portfolios
Read MoreHide Full Article
RCI Hospitality Holdings, Inc. (RICK - Free Report) is benefiting from efficiently progressing with its Back to Basics business approach and following an effective capital allocation strategy. These strategic initiatives are positively impacting the company’s business, resulting in notable operational improvements and shareholder value.
In the past six months, the company’s shares have lost 24.4% against the Zacks Leisure and Recreation Services industry’s 12% growth. However, this Zacks Rank #2 (Buy) company has shown some resilience in the past three months, gaining 6.2%.
Image Source: Zacks Investment Research
Although low contributions from the Bombshells segment and softer comps are concerning, the improvement implies that RICK has salvaged its growth trend over the past months on the back of the aforementioned tailwinds and is well-positioned for the upcoming period.
The Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2024 earnings indicate year-over-year growth of 69.6%. Also, earnings estimates for fiscal 2025 indicate a whopping 495.7% growth trend. The growth prospect is solidified with a VGM Score of B, backed by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of an outperformance in the near term.
Let us discuss the factors that highlight why investors must consider the stock for now.
Factors Supporting RICK Stock
Back to Basics Approach: Amid economic distress, RCI Hospitality came up with a strategic initiative to improve its business conditions and ensure smooth functioning across its reportable segments. The Back to Basics business approach outlines the company’s aim to ensure the efficient and profitable functioning of its locations. The priorities of this initiative include increasing same-store sales, improving margins and rebranding and reformatting underperforming locations.
RICK is currently working on a few of its revenue-generating assets that are to contribute to its revenues from the latter half of 2024 or early 2025. The company is optimistic about the ongoing refurbishments and construction process of new openings including the Baby Dolls project in Fort Worth, TX; Rick’s Cabaret & Steakhouse in Central City, CO; and three Bombshells projects in Denver, CO along with Lubbock and Rowlett, TX.
Effective Capital Allocation Strategies: Another strategic initiative undertaken by the company is to effectively allocate its free cash flow, about $200-$250 million, over the next five years starting October 2024. The allocation strategy underscores the assumption of no growth. The priorities of this strategy include targeting less than 10% of the discretionary free cash flow to ensure a stable and modestly growing dividend; about 50% of discretionary free cash flow for selective mergers and acquisitions; and approximately 40% of the remaining discretionary free cash flow for regular share buybacks.
RCI Hospitality has already started implementing this initiative to boost its shareholder value. On Sept. 3, 2024, the company hiked its quarterly cash dividend by 16.7% to 7 cents (28 cents per year). The dividend was paid on Sept. 30, 2024, to shareholders as of Sept. 16.
Trading at a Discount: RCI Hospitality is currently trading at a discount relative to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. RICK’s forward 12-month P/E ratio is 10.07, lower than the industry’s ratio of 17.89. The discounted valuation indicates that despite the recent recovery of the stock price over the past three months, it remains an attractive option for investors looking for a suitable entry point.
With the ongoing transformative and effective efforts on its core business and capital allocation, the company is positioning itself strongly for notable growth trends across revenues, EBITDA and free cash flow from fiscal 2025. The current discounted valuation situation may not last long, thus investors should stay ahead from now on and consider RICK stock.
ATAT has a trailing four-quarter earnings surprise of 9.1%, on average. The stock has risen 63.3% in the past year. The Zacks Consensus Estimate for ATAT’s 2024 sales and earnings per share (EPS) indicates growth of 49.5% and 32.6%, respectively, from the year-ago levels.
DoubleDown Interactive Co., Ltd. (DDI - Free Report) presently flaunts a Zacks Rank of 1. DDI has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has surged 89.2% in the past year.
The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) currently sports a Zacks Rank of 1. NCLH has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has gained 24.5% in the past year.
The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS indicates an increase of 9.9% and 127.1%, respectively, from the year-ago levels.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
Here's Why Investors Must Consider RICK Stock for Their Portfolios
RCI Hospitality Holdings, Inc. (RICK - Free Report) is benefiting from efficiently progressing with its Back to Basics business approach and following an effective capital allocation strategy. These strategic initiatives are positively impacting the company’s business, resulting in notable operational improvements and shareholder value.
In the past six months, the company’s shares have lost 24.4% against the Zacks Leisure and Recreation Services industry’s 12% growth. However, this Zacks Rank #2 (Buy) company has shown some resilience in the past three months, gaining 6.2%.
Image Source: Zacks Investment Research
Although low contributions from the Bombshells segment and softer comps are concerning, the improvement implies that RICK has salvaged its growth trend over the past months on the back of the aforementioned tailwinds and is well-positioned for the upcoming period.
The Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2024 earnings indicate year-over-year growth of 69.6%. Also, earnings estimates for fiscal 2025 indicate a whopping 495.7% growth trend. The growth prospect is solidified with a VGM Score of B, backed by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of an outperformance in the near term.
Let us discuss the factors that highlight why investors must consider the stock for now.
Factors Supporting RICK Stock
Back to Basics Approach: Amid economic distress, RCI Hospitality came up with a strategic initiative to improve its business conditions and ensure smooth functioning across its reportable segments. The Back to Basics business approach outlines the company’s aim to ensure the efficient and profitable functioning of its locations. The priorities of this initiative include increasing same-store sales, improving margins and rebranding and reformatting underperforming locations.
RICK is currently working on a few of its revenue-generating assets that are to contribute to its revenues from the latter half of 2024 or early 2025. The company is optimistic about the ongoing refurbishments and construction process of new openings including the Baby Dolls project in Fort Worth, TX; Rick’s Cabaret & Steakhouse in Central City, CO; and three Bombshells projects in Denver, CO along with Lubbock and Rowlett, TX.
Effective Capital Allocation Strategies: Another strategic initiative undertaken by the company is to effectively allocate its free cash flow, about $200-$250 million, over the next five years starting October 2024. The allocation strategy underscores the assumption of no growth. The priorities of this strategy include targeting less than 10% of the discretionary free cash flow to ensure a stable and modestly growing dividend; about 50% of discretionary free cash flow for selective mergers and acquisitions; and approximately 40% of the remaining discretionary free cash flow for regular share buybacks.
RCI Hospitality has already started implementing this initiative to boost its shareholder value. On Sept. 3, 2024, the company hiked its quarterly cash dividend by 16.7% to 7 cents (28 cents per year). The dividend was paid on Sept. 30, 2024, to shareholders as of Sept. 16.
Trading at a Discount: RCI Hospitality is currently trading at a discount relative to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. RICK’s forward 12-month P/E ratio is 10.07, lower than the industry’s ratio of 17.89. The discounted valuation indicates that despite the recent recovery of the stock price over the past three months, it remains an attractive option for investors looking for a suitable entry point.
With the ongoing transformative and effective efforts on its core business and capital allocation, the company is positioning itself strongly for notable growth trends across revenues, EBITDA and free cash flow from fiscal 2025. The current discounted valuation situation may not last long, thus investors should stay ahead from now on and consider RICK stock.
Other Key Picks
Here are some other top-ranked stocks from the Consumer Discretionary sector.
Atour Lifestyle Holdings Limited (ATAT - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ATAT has a trailing four-quarter earnings surprise of 9.1%, on average. The stock has risen 63.3% in the past year. The Zacks Consensus Estimate for ATAT’s 2024 sales and earnings per share (EPS) indicates growth of 49.5% and 32.6%, respectively, from the year-ago levels.
DoubleDown Interactive Co., Ltd. (DDI - Free Report) presently flaunts a Zacks Rank of 1. DDI has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has surged 89.2% in the past year.
The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) currently sports a Zacks Rank of 1. NCLH has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has gained 24.5% in the past year.
The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS indicates an increase of 9.9% and 127.1%, respectively, from the year-ago levels.