Comparing CAVA Group (NYSE:CAVA) and RCI Hospitality (NASDAQ:RICK)

RCI Hospitality (NASDAQ:RICK) and CAVA Group (NYSE:CAVA) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, risk, profitability, analyst recommendations and earnings.

Insider and Institutional Ownership

53.8% of RCI Hospitality shares are held by institutional investors. Comparatively, 73.2% of CAVA Group shares are held by institutional investors. 8.3% of RCI Hospitality shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
RCI Hospitality	8.81%	10.67%	4.86%
CAVA Group	1.82%	4.28%	1.50%

Analyst Ratings

This is a summary of recent ratings and target prices for RCI Hospitality and CAVA Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RCI Hospitality	0	0	2	0	3.00
CAVA Group	0	4	10	0	2.71

RCI Hospitality presently has a consensus price target of $120.00, suggesting a potential upside of 135.57%. CAVA Group has a consensus price target of $60.42, suggesting a potential downside of 18.83%. Given RCI Hospitality’s stronger consensus rating and higher possible upside, research analysts plainly believe RCI Hospitality is more favorable than CAVA Group.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RCI Hospitality	$293.79 million	1.62	$29.25 million	$2.79	18.26
CAVA Group	$728.70 million	11.60	$13.28 million	N/A	N/A

RCI Hospitality has higher earnings, but lower revenue than CAVA Group.

Summary

RCI Hospitality beats CAVA Group on 7 of the 11 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 CAVA Group

CAVA Group, Inc. owns and operates a chain of restaurants under the CAVA brand in the United States. The company also offers dips, spreads, and dressings through grocery stores. In addition, the company provides online and mobile ordering platforms. Cava Group, Inc. was founded in 2006 and is headquartered in Washington, the District of Columbia.