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

Profitability

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

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

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.

Volatility & Risk

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

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RCI Hospitality 0 0 2 0 3.00
Cosi 0 0 0 0 N/A

RCI Hospitality presently has a consensus price target of $28.50, indicating a potential downside of 12.55%. Given RCI Hospitality’s higher possible upside, research analysts clearly believe RCI Hospitality is more favorable than Cosi.

Valuation and Earnings

This table compares RCI Hospitality and Cosi’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RCI Hospitality $134.86 million 2.35 $11.08 million $1.13 28.84
Cosi N/A N/A N/A ($0.30) -0.01

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.

Institutional and Insider Ownership

48.4% of RCI Hospitality shares are held by institutional investors. Comparatively, 37.6% of Cosi shares are held by institutional investors. 7.6% of RCI Hospitality shares are held by company insiders. Comparatively, 7.8% of Cosi shares are held by company 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.

RCI Hospitality 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.

Cosi Company Profile

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.

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