Reviewing Target Hospitality (NASDAQ:TH) and RCI Hospitality (NASDAQ:RICK)

RCI Hospitality (NASDAQ:RICK) and Target Hospitality (NASDAQ:TH) 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 dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Insider and Institutional Ownership

53.8% of RCI Hospitality shares are held by institutional investors. Comparatively, 32.4% of Target Hospitality shares are held by institutional investors. 9.6% of RCI Hospitality shares are held by company insiders. Comparatively, 68.0% of Target Hospitality shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares RCI Hospitality and Target Hospitality’s 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%
Target Hospitality	-3.08%	-1.78%	-1.24%

Risk & Volatility

RCI Hospitality has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Target Hospitality has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RCI Hospitality	1	0	1	0	2.00
Target Hospitality	1	0	2	1	2.75

RCI Hospitality currently has a consensus price target of $98.00, indicating a potential upside of 281.03%. Target Hospitality has a consensus price target of $13.00, indicating a potential upside of 57.00%. Given RCI Hospitality’s higher possible upside, equities research analysts clearly believe RCI Hospitality is more favorable than Target Hospitality.

Valuation & Earnings

This table compares RCI Hospitality and Target Hospitality”s top-line 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	0.76	$3.01 million	$1.86	13.83
Target Hospitality	$386.27 million	2.14	$71.26 million	($0.11)	-75.27

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

Summary

Target Hospitality beats RCI Hospitality on 8 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 Target Hospitality

Target Hospitality Corp. operates as a specialty rental and hospitality services company in North America. The company operates through two segments, Hospitality & Facilities Services – South and Government. It owns a network of specialty rental accommodation units. In addition, the company provides catering and food, maintenance, housekeeping, grounds-keeping, security, health and recreation facilities, workforce community management, concierge, and laundry services. It serves the U.S. government contractors and investment grade natural resource development companies. Target Hospitality Corp. was founded in 1978 and is headquartered in The Woodlands, Texas.