Marcus (NYSE:MCS) and RCI Hospitality (NASDAQ:RICK) Critical Analysis

RCI Hospitality (NASDAQ:RICK) and Marcus (NYSE:MCS) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.

Dividends

RCI Hospitality pays an annual dividend of $0.32 per share and has a dividend yield of 1.4%. Marcus pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. RCI Hospitality pays out 26.7% of its earnings in the form of a dividend. Marcus pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RCI Hospitality has increased its dividend for 4 consecutive years and Marcus has increased its dividend for 2 consecutive years.

Volatility and Risk

RCI Hospitality has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Marcus has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for RCI Hospitality and Marcus, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RCI Hospitality	1	0	1	0	2.00
Marcus	0	2	3	1	2.83

RCI Hospitality currently has a consensus target price of $98.00, suggesting a potential upside of 330.96%. Marcus has a consensus target price of $23.50, suggesting a potential upside of 35.81%. Given RCI Hospitality’s higher probable upside, equities research analysts plainly believe RCI Hospitality is more favorable than Marcus.

Profitability

This table compares RCI Hospitality and Marcus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RCI Hospitality	3.87%	4.05%	1.82%
Marcus	1.67%	0.46%	0.21%

Insider & Institutional Ownership

53.8% of RCI Hospitality shares are held by institutional investors. Comparatively, 81.6% of Marcus shares are held by institutional investors. 9.6% of RCI Hospitality shares are held by insiders. Comparatively, 5.0% of Marcus shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RCI Hospitality	$279.43 million	0.63	$10.81 million	$1.20	18.95
Marcus	$758.46 million	0.70	$12.69 million	$0.40	43.26

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

The Marcus Corporation, together with its subsidiaries, owns and operates movie theatres, and hotels and resorts in the United States. It operates a family entertainment center and multiscreen motion picture theatres under the Big Screen Bistro, Big Screen Bistro Express, BistroPlex, and Movie Tavern by Marcus brand names. The company also owns and operates full-service hotels and resorts, as well as manages full-service hotels, resorts, and other properties. In addition, it provides hospitality management services, including check-in, housekeeping, and maintenance for a vacation ownership development; and manages condominium hotels under long-term management contracts. The Marcus Corporation was founded in 1935 and is headquartered in Milwaukee, Wisconsin.