Noble Roman’s (OTCMKTS: NROM) and RCI Hospitality Holdings (NASDAQ:RICK) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Dividends

RCI Hospitality Holdings pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Noble Roman’s does not pay a dividend. RCI Hospitality Holdings pays out 10.6% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Noble Roman’s -5.45% 8.25% 5.95%
RCI Hospitality Holdings 7.84% 10.75% 5.08%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Noble Roman’s and RCI Hospitality Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noble Roman’s 0 0 0 0 N/A
RCI Hospitality Holdings 0 0 2 0 3.00

RCI Hospitality Holdings has a consensus target price of $28.50, indicating a potential upside of 17.24%. Given RCI Hospitality Holdings’ higher probable upside, analysts clearly believe RCI Hospitality Holdings is more favorable than Noble Roman’s.

Insider & Institutional Ownership

0.3% of Noble Roman’s shares are held by institutional investors. Comparatively, 48.5% of RCI Hospitality Holdings shares are held by institutional investors. 29.7% of Noble Roman’s shares are held by insiders. Comparatively, 7.6% of RCI Hospitality Holdings shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Noble Roman’s has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, RCI Hospitality Holdings has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500.

Valuation & Earnings

This table compares Noble Roman’s and RCI Hospitality Holdings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Noble Roman’s $8.80 million 1.46 $3.32 million ($0.03) -20.66
RCI Hospitality Holdings $138.72 million 1.70 $35.64 million $1.13 21.51

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

Summary

RCI Hospitality Holdings beats Noble Roman’s on 10 of the 14 factors compared between the two stocks.

Noble Roman’s Company Profile

Noble Roman’s, Inc., with its two subsidiaries, Pizzaco, Inc. and N.R. Realty, Inc., sells and services franchises and licenses for non-traditional foodservice operations and take-n-bake locations under the names Noble Roman’s Pizza, Noble Roman’s Take-N-Bake and Tuscano’s Italian Style Subs. It offers pizza and sub sandwiches, along with other related menu items. The Company, through Noble Roman’s Pizza, offers fresh packed, uncondensed and never cooked sauce made with spices, parmesan cheese and vine-ripened tomatoes. It also offers real cheese blended from mozzarella and Muenster. Its product line includes breadsticks and cheesy stix with dip, pasta, baked sandwiches, salads, wings and a line of breakfast products. It has developed a take-n-bake version of its pizza as an addition to its menu offerings. It offers the take-n-bake program in grocery stores. Its Tuscano’s Italian Style Subs focuses on sub sandwich menu items. It operates over 2,210 franchised or licensed outlets.

RCI Hospitality Holdings Company Profile

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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