Financial Analysis: Bowlero (NYSE:BOWL) and RCI Hospitality (NASDAQ:RICK)

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

Valuation & Earnings

This table compares RCI Hospitality and Bowlero”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RCI Hospitality	$279.43 million	0.85	$10.81 million	($0.41)	-75.73
Bowlero	$1.19 billion	0.82	-$83.58 million	($0.61)	-10.82

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
RCI Hospitality	-1.48%	-1.74%	-0.72%
Bowlero	-6.63%	-31.58%	1.31%

Risk and Volatility

RCI Hospitality has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Bowlero has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Dividends

RCI Hospitality pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. Bowlero pays an annual dividend of $0.22 per share and has a dividend yield of 3.3%. RCI Hospitality pays out -78.0% of its earnings in the form of a dividend. Bowlero pays out -36.1% 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 raised its dividend for 4 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for RCI Hospitality and Bowlero, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RCI Hospitality	1	0	0	0	1.00
Bowlero	0	0	0	0	0.00

Insider & Institutional Ownership

53.8% of RCI Hospitality shares are owned by institutional investors. Comparatively, 68.1% of Bowlero shares are owned by institutional investors. 11.4% of RCI Hospitality shares are owned by company insiders. Comparatively, 79.9% of Bowlero shares are owned 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.

Summary

RCI Hospitality beats Bowlero on 9 of the 15 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 Bowlero

Bowlero Corp. operates bowling entertainment centers under the AMF, Bowlmor Lanes, and Bowlero brand names. The company also provides hosting and overseeing professional and non-professional bowling tournaments and related broadcasting. It operates bowling centers in the United States, Mexico, and Canada. The company is headquartered in Mechanicsville, Virginia.