Contrasting RCI Hospitality (NASDAQ:RICK) and Atour Lifestyle (NASDAQ:ATAT)

Atour Lifestyle (NASDAQ:ATAT) and RCI Hospitality (NASDAQ:RICK) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Earnings & Valuation

This table compares Atour Lifestyle and RCI Hospitality”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atour Lifestyle	$992.96 million	4.92	$174.72 million	$1.38	25.63
RCI Hospitality	$281.74 million	0.68	$3.01 million	$1.86	11.81

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

Dividends

Atour Lifestyle pays an annual dividend of $0.39 per share and has a dividend yield of 1.1%. RCI Hospitality pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. Atour Lifestyle pays out 28.3% of its earnings in the form of a dividend. RCI Hospitality pays out 15.1% 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. RCI Hospitality is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Atour Lifestyle and RCI Hospitality, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atour Lifestyle	0	0	7	1	3.13
RCI Hospitality	1	0	1	0	2.00

Atour Lifestyle currently has a consensus price target of $41.92, suggesting a potential upside of 18.51%. RCI Hospitality has a consensus price target of $98.00, suggesting a potential upside of 346.06%. Given RCI Hospitality’s higher probable upside, analysts clearly believe RCI Hospitality is more favorable than Atour Lifestyle.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Atour Lifestyle	16.52%	45.66%	17.62%
RCI Hospitality	5.88%	6.19%	2.81%

Insider & Institutional Ownership

17.8% of Atour Lifestyle shares are held by institutional investors. Comparatively, 53.8% of RCI Hospitality shares are held by institutional investors. 9.6% of RCI Hospitality shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Atour Lifestyle has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500. Comparatively, RCI Hospitality has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Summary

Atour Lifestyle beats RCI Hospitality on 10 of the 18 factors compared between the two stocks.

About Atour Lifestyle

Atour Lifestyle Holdings Limited, through its subsidiaries, develops lifestyle brands around hotel offerings in the People’s Republic of China. The company provides hotel management services, including day-to-day management services of the hotels for the franchisees; and sells hotel supplies and other products. It also offers retail management service; investment management service; financial information service management; property management services; and software and technology services, as well as operates travel agency. Atour Lifestyle Holdings Limited was incorporated in 2012 and is headquartered in Shanghai, China.

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.