RICK's Q4 Update: Buyback and Expansion Signal Hope Amid Soft Comps
RCI Hospitality Holdings, Inc. RICK has provided an update on its business for the fourth quarter of fiscal 2024.
Q4 Preliminary Revenue Results
During the fiscal fourth quarter, the company reported total sales of $72.1 million, down 2.6% year over year. During the quarter, the company’s same-store sales dropped 1.1% year over year due to external challenges like Hurricane Beryl, which caused temporary closures at key locations.
During the quarter, sales from Nightclubs came in at $60.2 million, down 0.5% year over year. The downside can be attributed to the disruption caused by Hurricane Beryl, which led to 10 closure days at three of RICK’s clubs in Houston. In addition, temporary closures, such as the fire at Baby Dolls Fort Worth, impacted overall performance. However, this was partially mitigated by contributions from three new or reformatted clubs (in Harlingen, Lubbock and Tye, TX) and 2.2% same-store sales growth.
Sales from Bombshells restaurants in the fiscal fourth quarter came in at $11.9 million, down 12.2% from the year-ago quarter’s levels. The downside was due to a fall in same-store sales (down 16.2% year over year). Also, prolonged closure of five Houston-area locations (impacted by Hurricane Beryl) added to the negatives.
Other Updates
During the fiscal fourth quarter, RICK repurchased 0.17 million shares of its common stock, worth approximately $7.8 million. As of Sept. 30, the company stated the availability of approximately $21 million in stock repurchase authorization and 8.96 million shares outstanding.
Looking ahead, RICK is gearing up for expansion, with six new clubs and restaurants planned for fiscal 2025. This includes the anticipated reopening of Baby Dolls Fort Worth, which was temporarily closed after a fire in early July. The new openings are expected to drive growth and boost revenues in the coming periods.
RICK’s Attractive Valuation Signals Undervaluation
Investors should take note of RICK’s current valuation. The stock is trading at a 12-month forward price-to-earnings (P/E) ratio of 10.10, which is significantly lower than the industry average of 17.84x. This valuation signals that RICK could be undervalued relative to its peers, presenting a potential opportunity for investors seeking value stocks with growth potential. Given the company’s resilience, expansion plans and strategic initiatives, the stock appears to offer a compelling investment case at its current price levels.
Our Thoughts on RICK Stock
The company’s continued focus on enhancing its existing portfolio, along with strategic share repurchases, underscores its commitment to maximizing shareholder value. Investors looking for a company with a resilient business model, attractive valuation and strong growth prospects may find RCI Hospitality to be an intriguing opportunity. With the stock trading below the industry P/E average and ongoing expansion efforts, RICK could be well-positioned for further gains in the coming periods.
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Shares of the company have gained 7.7% in the past three months compared with the industry’s 12.4% rise.
RICK’s Zacks Rank & Other Key Picks
RCI Hospitality currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are Norwegian Cruise Line Holdings Ltd. NCLH, DoubleDown Interactive Co., Ltd. DDI and Carnival Corporation & plc CCL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Norwegian Cruise Line has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has rallied 25.2% in the past year. The Zacks Consensus Estimate for NCLH’s 2024 sales and earnings per share (EPS) calls for growth of 9.9% and 127.1%, respectively, from the year-ago levels.
DoubleDown Interactive has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has surged 73.4% in the past year. The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Carnival has a trailing four-quarter earnings surprise of 318.1%, on average. The stock has increased 46.3% in the past year. The Zacks Consensus Estimate for CCL’s 2025 sales and EPS indicates an increase of 3.6% and 26%, respectively, from the year-ago levels.
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