Intrinsic value of RCI Hospitality Holdings, Inc. - RICK

Previous Close

$17.09

  Intrinsic Value

$18.02

stock screener

  Rating & Target

hold

+5%

Previous close

$17.09

 
Intrinsic value

$18.02

 
Up/down potential

+5%

 
Rating

hold

We calculate the intrinsic value of RICK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  177
  189
  201
  214
  227
  241
  255
  270
  286
  302
  319
  337
  355
  375
  395
  416
  439
  462
  486
  512
  538
  566
  596
  626
  659
  692
  728
  765
  804
  845
Variable operating expenses, $m
  131
  138
  147
  155
  164
  173
  183
  193
  204
  214
  214
  226
  239
  252
  265
  280
  295
  310
  327
  344
  362
  380
  400
  421
  442
  465
  489
  514
  540
  567
Fixed operating expenses, $m
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
Total operating expenses, $m
  146
  154
  163
  171
  181
  190
  200
  211
  222
  233
  233
  245
  259
  272
  286
  301
  317
  332
  350
  367
  386
  404
  425
  446
  468
  491
  516
  542
  568
  596
Operating income, $m
  31
  35
  39
  42
  46
  50
  55
  59
  64
  69
  86
  91
  97
  103
  109
  115
  122
  129
  137
  145
  153
  162
  171
  180
  190
  201
  212
  224
  236
  249
EBITDA, $m
  51
  55
  59
  63
  68
  73
  78
  83
  88
  94
  100
  106
  112
  119
  126
  134
  142
  150
  158
  167
  177
  187
  197
  208
  219
  231
  244
  257
  271
  286
Interest expense (income), $m
  0
  11
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
Earnings before tax, $m
  21
  23
  26
  29
  32
  35
  38
  42
  45
  49
  65
  69
  73
  77
  82
  87
  92
  98
  103
  109
  115
  122
  129
  136
  144
  152
  160
  169
  178
  188
Tax expense, $m
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  17
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
Net income, $m
  15
  17
  19
  21
  23
  26
  28
  31
  33
  36
  47
  50
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  111
  117
  123
  130
  137

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  349
  372
  396
  421
  447
  474
  503
  532
  563
  595
  628
  663
  700
  738
  778
  820
  863
  909
  957
  1,007
  1,060
  1,115
  1,173
  1,233
  1,296
  1,363
  1,433
  1,506
  1,583
  1,663
Adjusted assets (=assets-cash), $m
  349
  372
  396
  421
  447
  474
  503
  532
  563
  595
  628
  663
  700
  738
  778
  820
  863
  909
  957
  1,007
  1,060
  1,115
  1,173
  1,233
  1,296
  1,363
  1,433
  1,506
  1,583
  1,663
Revenue / Adjusted assets
  0.507
  0.508
  0.508
  0.508
  0.508
  0.508
  0.507
  0.508
  0.508
  0.508
  0.508
  0.508
  0.507
  0.508
  0.508
  0.507
  0.509
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
Average production assets, $m
  234
  249
  265
  282
  299
  318
  336
  356
  377
  398
  421
  444
  468
  494
  521
  549
  578
  609
  641
  674
  710
  746
  785
  826
  868
  913
  959
  1,008
  1,060
  1,113
Working capital, $m
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
Total debt, $m
  152
  164
  177
  190
  204
  219
  234
  249
  265
  282
  300
  319
  338
  358
  380
  402
  425
  449
  474
  501
  529
  558
  589
  621
  654
  690
  727
  765
  806
  849
Total liabilities, $m
  185
  197
  210
  223
  237
  251
  266
  282
  298
  315
  333
  351
  371
  391
  412
  434
  458
  482
  507
  534
  562
  591
  621
  653
  687
  722
  759
  798
  839
  881
Total equity, $m
  164
  175
  186
  198
  210
  223
  236
  250
  264
  280
  295
  312
  329
  347
  366
  385
  406
  427
  450
  473
  498
  524
  551
  580
  609
  641
  673
  708
  744
  782
Total liabilities and equity, $m
  349
  372
  396
  421
  447
  474
  502
  532
  562
  595
  628
  663
  700
  738
  778
  819
  864
  909
  957
  1,007
  1,060
  1,115
  1,172
  1,233
  1,296
  1,363
  1,432
  1,506
  1,583
  1,663
Debt-to-equity ratio
  0.930
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.000
  1.010
  1.020
  1.020
  1.030
  1.030
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
  1.060
  1.070
  1.070
  1.070
  1.070
  1.080
  1.080
  1.080
  1.080
  1.090
Adjusted equity ratio
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15
  17
  19
  21
  23
  26
  28
  31
  33
  36
  47
  50
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  111
  117
  123
  130
  137
Depreciation, amort., depletion, $m
  19
  20
  20
  21
  21
  22
  23
  23
  24
  25
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  30
  32
  34
  35
  37
Funds from operations, $m
  34
  37
  39
  42
  45
  48
  51
  54
  57
  61
  61
  65
  69
  73
  77
  82
  87
  91
  97
  102
  108
  114
  120
  127
  134
  141
  149
  157
  165
  174
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  34
  37
  39
  42
  45
  47
  50
  54
  57
  60
  61
  64
  68
  72
  77
  81
  86
  91
  96
  102
  107
  113
  120
  126
  133
  140
  148
  156
  164
  173
Maintenance CAPEX, $m
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -34
  -35
New CAPEX, $m
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -42
  -45
  -47
  -49
  -51
  -54
Cash from investing activities, $m
  -22
  -23
  -24
  -26
  -26
  -28
  -30
  -31
  -33
  -34
  -35
  -37
  -39
  -42
  -43
  -45
  -47
  -50
  -52
  -55
  -57
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
Free cash flow, $m
  12
  13
  15
  16
  18
  19
  21
  23
  24
  26
  25
  27
  29
  31
  34
  36
  38
  41
  44
  47
  50
  53
  56
  59
  63
  67
  71
  75
  80
  84
Issuance/(repayment) of debt, $m
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
Total cash flow (excl. dividends), $m
  24
  26
  28
  29
  32
  34
  36
  38
  41
  43
  43
  46
  48
  51
  55
  58
  62
  65
  69
  73
  77
  82
  87
  92
  97
  102
  108
  114
  120
  127
Retained Cash Flow (-), $m
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  13
  15
  16
  18
  19
  21
  23
  24
  26
  28
  27
  29
  31
  34
  36
  38
  41
  44
  47
  50
  53
  56
  59
  63
  67
  71
  75
  79
  84
  89
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  12
  13
  13
  13
  13
  13
  12
  11
  11
  10
  8
  7
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

RCI Hospitality Holdings, Inc., through its subsidiaries, engages in the hospitality and related businesses in the United States. It operates in two segments, Nightclubs and Bombshells Restaurants/Sports Bars. The company owns and/or operates upscale adult nightclubs serving primarily businessmen and professionals under the Rick’s Cabaret, Vivid Cabaret, Tootsie’s Cabaret, Club Onyx, Jaguars Club, XTC Cabaret, Hoops Cabaret, Downtown Cabaret, Temptations, Silver City Cabaret, Foxy’s Cabaret, Cabaret East, and The Seville brands. It also operates four restaurants/sports bars under the Bombshells brand; and a bar under the Studio 80 brand. As of December 13, 2016, the company operated 41 units that offers live adult entertainment, and/or restaurant and bar operations. In addition, it owns a national industry convention and tradeshow; 2 national industry trade publications; 2 national industry award shows; and approximately 25 industry Websites. The company was formerly known as Rick’s Cabaret International, Inc. and changed its name to RCI Hospitality Holdings, Inc. in August 2014. RCI Hospitality Holdings, Inc. was founded in 1982 and is based in Houston, Texas.

FINANCIAL RATIOS  of  RCI Hospitality Holdings, Inc. (RICK)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

RICK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RICK stock intrinsic value calculation we used $166 million for the last fiscal year's total revenue generated by RCI Hospitality Holdings, Inc.. The default revenue input number comes from 0001 income statement of RCI Hospitality Holdings, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our RICK stock valuation model: a) initial revenue growth rate of 6.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7%, whose default value for RICK is calculated based on our internal credit rating of RCI Hospitality Holdings, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of RCI Hospitality Holdings, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of RICK stock the variable cost ratio is equal to 74.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $15 million in the base year in the intrinsic value calculation for RICK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.5% for RCI Hospitality Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for RCI Hospitality Holdings, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the RICK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for RICK are equal to 131.8%.

Life of production assets of 35.9 years is the average useful life of capital assets used in RCI Hospitality Holdings, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for RICK is equal to 2.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $153.435 million for RCI Hospitality Holdings, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 9.690 million for RCI Hospitality Holdings, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of RCI Hospitality Holdings, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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