RCI Hospitality (NASDAQ:RICK) vs. Cosi (COSIQ) Critical Review

Cosi (OTCMKTS: COSIQ) and RCI Hospitality (NASDAQ:RICK) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Dividends

RCI Hospitality pays an annual dividend of $0.12 per share and has a dividend yield of 0.4%. Cosi does not pay a dividend. RCI Hospitality pays out 10.6% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Cosi and RCI Hospitality’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cosi N/A N/A N/A ($0.30) -0.01
RCI Hospitality $134.86 million 2.28 $11.08 million $1.13 28.04

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

Volatility & Risk

Cosi has a beta of -1.23, meaning that its share price is 223% less volatile than the S&P 500. Comparatively, RCI Hospitality has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Cosi and RCI Hospitality, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cosi 0 0 0 0 N/A
RCI Hospitality 0 0 1 0 3.00

RCI Hospitality has a consensus price target of $30.00, indicating a potential downside of 5.33%. Given RCI Hospitality’s higher possible upside, analysts plainly believe RCI Hospitality is more favorable than Cosi.

Profitability

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

Net Margins Return on Equity Return on Assets
Cosi -13.67% -96.97% -38.82%
RCI Hospitality 7.84% 10.75% 5.08%

Institutional & Insider Ownership

37.6% of Cosi shares are held by institutional investors. Comparatively, 48.7% of RCI Hospitality shares are held by institutional investors. 7.8% of Cosi shares are held by insiders. Comparatively, 7.6% of RCI Hospitality shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

RCI Hospitality beats Cosi on 10 of the 12 factors compared between the two stocks.

About Cosi

Cosi, Inc. is an international fast casual restaurant company. The Company offers its flatbread. Its menu features made-to-order sandwiches, hand-tossed salads, bowls, breakfast wraps, melts, soups, signature Squagels, artisan flatbread pizzas, S’mores, snacks and desserts. It also offers handcrafted beverages and a variety of coffee-based and specialty beverages. Its sandwiches include tbm, turkey and brie, tuna, turkey avocado and chicken parmesan melt. Its cosi salads are made with fresh ingredients and its own signature dressings. Its soups include tomato basil, turkey chili, smart fit chicken noodle, and mediterranean lentil. Its handcrafted beverages include iced tea, raspberry iced tea, country club iced tea, mojito lemonade, raspberry mojito lemonade. It also offers catering services to its customers. The Company operates in 43 Company-owned and 30 franchise restaurants in fourteen states in the United States, the District of Columbia, Costa Rica and the United Arab Emirates.

About RCI Hospitality

With more than 40 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in gentlemen’s clubs and sports bars/restaurants. Clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, and other cities operate under brand names, such as “Rick’s Cabaret,” “XTC,” “Club Onyx,” “Vivid Cabaret,” “Jaguars” and “Tootsie’s Cabaret.” Sports bars/restaurants operate under the brand name “Bombshells Restaurant & Bar.” Investors are attracted by RCI’s strong cash flow, operating margins and local laws that create high barriers to entry in the gentlemen’s club business.

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