Financial Review: RCI Hospitality (NASDAQ:RICK) and Madison Square Garden (NYSE:MSGS)

RCI Hospitality (NASDAQ:RICK) and Madison Square Garden (NYSE:MSGS) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for RCI Hospitality and Madison Square Garden, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RCI Hospitality	1	0	0	0	1.00
Madison Square Garden	0	5	4	0	2.44

Madison Square Garden has a consensus price target of $312.80, suggesting a potential downside of 6.46%. Given Madison Square Garden’s stronger consensus rating and higher probable upside, analysts plainly believe Madison Square Garden is more favorable than RCI Hospitality.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RCI Hospitality	$279.43 million	0.68	$10.81 million	$1.20	20.56
Madison Square Garden	$1.04 billion	7.75	-$22.44 million	($0.69)	-484.64

RCI Hospitality has higher earnings, but lower revenue than Madison Square Garden. Madison Square Garden is trading at a lower price-to-earnings ratio than RCI Hospitality, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
RCI Hospitality	3.87%	4.05%	1.82%
Madison Square Garden	-1.55%	N/A	-1.10%

Volatility and Risk

RCI Hospitality has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Madison Square Garden has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500.

Institutional & Insider Ownership

53.8% of RCI Hospitality shares are held by institutional investors. Comparatively, 68.9% of Madison Square Garden shares are held by institutional investors. 9.6% of RCI Hospitality shares are held by company insiders. Comparatively, 19.1% of Madison Square Garden shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

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 Madison Square Garden

Madison Square Garden Sports Corp. operates as a professional sports company in the United States. The company owns and operates a portfolio of assets that consists of the New York Knickerbockers of the National Basketball Association (NBA) and the New York Rangers of the National Hockey League. Its other professional franchises include development league teams, the Hartford Wolf Pack of the American Hockey League and the Westchester Knicks of the NBA G League. The company also owns Knicks Gaming, an esports franchise that competes in the NBA 2K League. In addition, it operates professional sports team performance centers, the Madison Square Garden Training Center in Greenburgh. The company was formerly known as The Madison Square Garden Company. Madison Square Garden Sports Corp. was incorporated in 2015 and is based in New York, New York.