Royal Caribbean Cruises (NYSE:RCL) versus RCI Hospitality (NASDAQ:RICK) Critical Analysis

RCI Hospitality (NASDAQ:RICK) and Royal Caribbean Cruises (NYSE:RCL) are both consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Profitability

This table compares RCI Hospitality and Royal Caribbean Cruises’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RCI Hospitality	5.88%	6.19%	2.81%
Royal Caribbean Cruises	23.80%	45.06%	10.87%

Dividends

RCI Hospitality pays an annual dividend of $0.28 per share and has a dividend yield of 1.2%. Royal Caribbean Cruises pays an annual dividend of $4.00 per share and has a dividend yield of 1.2%. RCI Hospitality pays out 15.1% of its earnings in the form of a dividend. Royal Caribbean Cruises pays out 25.6% 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. RCI Hospitality has increased its dividend for 4 consecutive years and Royal Caribbean Cruises has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for RCI Hospitality and Royal Caribbean Cruises, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RCI Hospitality	1	0	1	0	2.00
Royal Caribbean Cruises	0	4	18	1	2.87

RCI Hospitality currently has a consensus target price of $98.00, indicating a potential upside of 327.39%. Royal Caribbean Cruises has a consensus target price of $348.29, indicating a potential upside of 7.73%. Given RCI Hospitality’s higher probable upside, analysts clearly believe RCI Hospitality is more favorable than Royal Caribbean Cruises.

Institutional & Insider Ownership

53.8% of RCI Hospitality shares are held by institutional investors. Comparatively, 87.5% of Royal Caribbean Cruises shares are held by institutional investors. 9.6% of RCI Hospitality shares are held by company insiders. Comparatively, 7.0% of Royal Caribbean Cruises shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

RCI Hospitality has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500. Comparatively, Royal Caribbean Cruises has a beta of 1.91, suggesting that its share price is 91% more volatile than the S&P 500.

Valuation & Earnings

This table compares RCI Hospitality and Royal Caribbean Cruises”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RCI Hospitality	$295.60 million	0.68	$3.01 million	$1.86	12.33
Royal Caribbean Cruises	$17.94 billion	4.88	$4.27 billion	$15.61	20.71

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

Summary

Royal Caribbean Cruises beats RCI Hospitality on 14 of the 18 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’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.

About Royal Caribbean Cruises

Royal Caribbean Cruises Ltd. operates as a cruise company worldwide. The company operates cruises under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands, which comprise a range of itineraries. As of February 21, 2024, it operated 65 ships. Royal Caribbean Cruises Ltd. was founded in 1968 and is headquartered in Miami, Florida.