Contrasting RCI Hospitality (NASDAQ:RICK) and Sonder (NASDAQ:SOND)

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

Profitability

This table compares RCI Hospitality and Sonder’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%
Sonder	-28.31%	N/A	-14.94%

Risk & Volatility

RCI Hospitality has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, Sonder has a beta of 1.76, indicating that its stock price is 76% more volatile than the S&P 500.

Insider & Institutional Ownership

53.8% of RCI Hospitality shares are held by institutional investors. Comparatively, 45.9% of Sonder shares are held by institutional investors. 9.6% of RCI Hospitality shares are held by company insiders. Comparatively, 3.8% of Sonder shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RCI Hospitality	1	0	1	0	2.00
Sonder	1	0	0	0	1.00

RCI Hospitality currently has a consensus target price of $98.00, suggesting a potential upside of 268.28%. Given RCI Hospitality’s stronger consensus rating and higher possible upside, research analysts clearly believe RCI Hospitality is more favorable than Sonder.

Earnings and Valuation

This table compares RCI Hospitality and Sonder”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RCI Hospitality	$295.60 million	0.78	$3.01 million	$1.86	14.31
Sonder	$621.27 million	0.02	-$224.09 million	($15.18)	-0.07

RCI Hospitality has higher earnings, but lower revenue than Sonder. Sonder 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

RCI Hospitality beats Sonder on 12 of the 14 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 Sonder

Sonder Holdings Inc. engages in the hospitality business. It operates and manages properties comprising 1-, 2-, and 3+ bedroom; and studio apartments, as well as 1-bedroom hotel rooms for leisure travelers and families, digital nomads, and business travelers in North America, Europe, and the Middle East. The company is headquartered in San Francisco, California.