Yahoo Finance Why RCI Hospitality Holdings, Inc. (NASDAQ:RICK) Could Be Worth Watching
RCI Hospitality Holdings, Inc. (NASDAQ:RICK), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$63.14 and falling to the lows of US$50.02. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether RCI Hospitality Holdings' current trading price of US$50.92 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at RCI Hospitality Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for RCI Hospitality Holdings
Is RCI Hospitality Holdings Still Cheap?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 18.17x is currently trading slightly below its industry peers’ ratio of 19.59x, which means if you buy RCI Hospitality Holdings today, you’d be paying a reasonable price for it. And if you believe RCI Hospitality Holdings should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that RCI Hospitality Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of RCI Hospitality Holdings look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. In the upcoming year, RCI Hospitality Holdings' earnings are expected to increase by 44%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? RICK’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at RICK? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on RICK, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for RICK, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about RCI Hospitality Holdings as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with RCI Hospitality Holdings, and understanding them should be part of your investment process.
If you are no longer interested in RCI Hospitality Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
