Intrinsic value of RCI Hospitality Holdings - RICK

Previous Close

$25.70

  Intrinsic Value

$16.19

stock screener

  Rating & Target

sell

-37%

Previous close

$25.70

 
Intrinsic value

$16.19

 
Up/down potential

-37%

 
Rating

sell

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, %
  13.90
  13.01
  12.21
  11.49
  10.84
  10.26
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
  6.48
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
  5.42
Revenue, $m
  165
  187
  209
  233
  259
  285
  313
  342
  372
  403
  436
  470
  505
  542
  580
  620
  661
  704
  749
  795
  843
  894
  946
  1,001
  1,058
  1,118
  1,180
  1,245
  1,314
  1,385
Variable operating expenses, $m
  122
  137
  152
  168
  185
  203
  222
  241
  261
  282
  292
  315
  339
  363
  389
  416
  443
  472
  502
  533
  565
  599
  634
  671
  709
  749
  791
  835
  881
  928
Fixed operating expenses, $m
  13
  14
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  18
  19
  19
  20
  20
  21
  21
  21
  22
  22
  23
  23
  24
  24
  25
Total operating expenses, $m
  135
  151
  166
  182
  199
  218
  237
  256
  277
  298
  309
  332
  356
  381
  407
  434
  462
  491
  522
  553
  586
  620
  655
  693
  731
  772
  814
  859
  905
  953
Operating income, $m
  29
  36
  43
  51
  59
  67
  76
  85
  95
  105
  127
  138
  149
  161
  173
  186
  199
  213
  227
  242
  258
  274
  291
  308
  326
  346
  366
  387
  409
  431
EBITDA, $m
  49
  56
  65
  73
  83
  92
  102
  113
  124
  135
  147
  160
  172
  186
  200
  214
  229
  245
  261
  278
  296
  315
  334
  354
  375
  397
  420
  444
  469
  495
Interest expense (income), $m
  0
  9
  11
  13
  15
  17
  19
  22
  24
  27
  29
  32
  35
  38
  41
  44
  48
  51
  55
  58
  62
  66
  71
  75
  80
  84
  89
  95
  100
  106
  112
Earnings before tax, $m
  20
  25
  30
  36
  42
  48
  54
  61
  68
  76
  95
  103
  112
  120
  129
  138
  148
  158
  169
  180
  191
  203
  216
  229
  242
  256
  271
  287
  303
  320
Tax expense, $m
  5
  7
  8
  10
  11
  13
  15
  17
  18
  20
  26
  28
  30
  32
  35
  37
  40
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  82
  86
Net income, $m
  14
  18
  22
  26
  30
  35
  40
  45
  50
  55
  70
  75
  81
  88
  94
  101
  108
  116
  123
  131
  140
  148
  157
  167
  177
  187
  198
  209
  221
  233

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
  341
  385
  432
  482
  534
  589
  646
  706
  769
  834
  901
  971
  1,044
  1,120
  1,199
  1,281
  1,366
  1,455
  1,547
  1,643
  1,743
  1,847
  1,955
  2,069
  2,187
  2,310
  2,439
  2,573
  2,714
  2,861
Adjusted assets (=assets-cash), $m
  341
  385
  432
  482
  534
  589
  646
  706
  769
  834
  901
  971
  1,044
  1,120
  1,199
  1,281
  1,366
  1,455
  1,547
  1,643
  1,743
  1,847
  1,955
  2,069
  2,187
  2,310
  2,439
  2,573
  2,714
  2,861
Revenue / Adjusted assets
  0.484
  0.486
  0.484
  0.483
  0.485
  0.484
  0.485
  0.484
  0.484
  0.483
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
Average production assets, $m
  226
  256
  287
  320
  355
  391
  429
  469
  510
  554
  598
  645
  693
  744
  796
  851
  907
  966
  1,027
  1,091
  1,157
  1,226
  1,298
  1,374
  1,452
  1,534
  1,619
  1,709
  1,802
  1,900
Working capital, $m
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
Total debt, $m
  147
  172
  198
  226
  255
  285
  317
  351
  385
  422
  459
  498
  539
  581
  625
  671
  718
  767
  819
  872
  928
  986
  1,046
  1,109
  1,175
  1,244
  1,316
  1,391
  1,469
  1,551
Total liabilities, $m
  190
  215
  241
  269
  298
  328
  360
  393
  428
  464
  502
  541
  582
  624
  668
  713
  761
  810
  862
  915
  971
  1,029
  1,089
  1,152
  1,218
  1,287
  1,358
  1,433
  1,512
  1,594
Total equity, $m
  151
  171
  192
  214
  237
  261
  286
  313
  341
  369
  399
  430
  463
  496
  531
  567
  605
  644
  685
  728
  772
  818
  866
  916
  969
  1,023
  1,080
  1,140
  1,202
  1,267
Total liabilities and equity, $m
  341
  386
  433
  483
  535
  589
  646
  706
  769
  833
  901
  971
  1,045
  1,120
  1,199
  1,280
  1,366
  1,454
  1,547
  1,643
  1,743
  1,847
  1,955
  2,068
  2,187
  2,310
  2,438
  2,573
  2,714
  2,861
Debt-to-equity ratio
  0.970
  1.010
  1.030
  1.060
  1.080
  1.090
  1.110
  1.120
  1.130
  1.140
  1.150
  1.160
  1.160
  1.170
  1.180
  1.180
  1.190
  1.190
  1.190
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.220
  1.220
  1.220
  1.220
  1.220
Adjusted equity ratio
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  18
  22
  26
  30
  35
  40
  45
  50
  55
  70
  75
  81
  88
  94
  101
  108
  116
  123
  131
  140
  148
  157
  167
  177
  187
  198
  209
  221
  233
Depreciation, amort., depletion, $m
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  20
  22
  23
  25
  27
  28
  30
  32
  34
  36
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
Funds from operations, $m
  34
  39
  43
  49
  54
  60
  66
  72
  79
  86
  89
  97
  105
  112
  121
  129
  138
  148
  157
  168
  178
  189
  201
  213
  225
  238
  252
  266
  281
  297
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  33
  38
  43
  48
  54
  59
  65
  72
  78
  85
  89
  96
  104
  112
  120
  129
  138
  147
  157
  167
  177
  188
  200
  212
  224
  237
  251
  265
  280
  296
Maintenance CAPEX, $m
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
New CAPEX, $m
  -27
  -29
  -31
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -47
  -48
  -50
  -52
  -54
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -82
  -86
  -89
  -93
  -98
Cash from investing activities, $m
  -34
  -37
  -40
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -98
  -102
  -108
  -113
  -118
  -124
  -130
  -137
  -143
  -150
  -158
Free cash flow, $m
  -1
  1
  3
  6
  8
  11
  14
  18
  21
  25
  26
  30
  34
  38
  43
  48
  53
  58
  63
  69
  75
  81
  87
  93
  100
  107
  114
  122
  130
  138
Issuance/(repayment) of debt, $m
  23
  25
  26
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  42
  44
  46
  47
  49
  51
  53
  56
  58
  60
  63
  66
  69
  72
  75
  78
  82
Issuance/(repurchase) of shares, $m
  4
  1
  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  
  27
  26
  26
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  42
  44
  46
  47
  49
  51
  53
  56
  58
  60
  63
  66
  69
  72
  75
  78
  82
Total cash flow (excl. dividends), $m
  26
  27
  29
  33
  37
  42
  46
  51
  56
  61
  63
  69
  75
  81
  87
  93
  100
  107
  115
  122
  130
  139
  147
  156
  166
  176
  186
  197
  208
  220
Retained Cash Flow (-), $m
  -18
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -62
  -65
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
  8
  8
  9
  11
  14
  17
  21
  24
  28
  32
  33
  38
  42
  47
  52
  57
  62
  68
  74
  80
  86
  92
  99
  106
  113
  121
  129
  137
  146
  155
Discount rate, %
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
  7
  7
  7
  8
  9
  10
  11
  11
  11
  11
  10
  9
  8
  8
  7
  6
  5
  4
  3
  3
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  98.5
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0

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 (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 $144.896 million for the last fiscal year's total revenue generated by RCI Hospitality Holdings. The default revenue input number comes from 0001 income statement of RCI Hospitality Holdings. 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 13.9% 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 7.4%, whose default value for RICK is calculated based on our internal credit rating of RCI Hospitality Holdings, 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.
    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 75.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13 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 7.6% for RCI Hospitality Holdings.

Corporate tax rate of 27% is the nominal tax rate for RCI Hospitality Holdings. 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 137.2%.

Life of production assets of 36.6 years is the average useful life of capital assets used in RCI Hospitality Holdings 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 1.8%. 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 - $132.745 million for RCI Hospitality Holdings - 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 9.719 million for RCI Hospitality Holdings 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 at the current share price and the inputted number of shares is $0.2 billion.

COMPANY NEWS

▶ /C O R R E C T I O N -- RCI Hospitality Holdings, Inc./   [Nov-15-18 09:30AM  PR Newswire]
▶ Houston co. expands into Pittsburgh with gentlemen's club acquisition   [Aug-22-18 03:50PM  American City Business Journals]
▶ RCI Hospitality: Fiscal 3Q Earnings Snapshot   [04:56PM  Associated Press]
▶ RCI Reports Strong 3Q18 Results   [04:05PM  PR Newswire]
▶ Top Ranked Value Stocks to Buy for July 13th   [Jul-13-18 09:47AM  Zacks]
▶ Top Ranked Value Stocks to Buy for July 11th   [Jul-11-18 09:36AM  Zacks]
▶ Top Ranked Value Stocks to Buy for July 10th   [Jul-10-18 10:20AM  Zacks]
▶ Top Ranked Value Stocks to Buy for July 9th   [Jul-09-18 10:34AM  Zacks]
▶ Top Ranked Value Stocks to Buy for July 5th   [Jul-05-18 09:36AM  Zacks]
▶ Bombshells along I-45 to reopen, sell alcohol under new agreement   [Jun-20-18 07:32PM  American City Business Journals]
▶ Restaurant Stocks Delivering the Gains   [Jun-08-18 02:25PM  Investopedia]
▶ RCI CEO Conference Call with Seeking Alpha Columnist   [May-25-18 10:07AM  PR Newswire]
▶ Top Ranked Momentum Stocks to Buy for May 22nd   [May-22-18 10:44AM  Zacks]
▶ RCI Hospitality: Fiscal 2Q Earnings Snapshot   [May-10-18 05:18PM  Associated Press]
▶ RCI Reports Strong 2Q18 Results   [04:05PM  PR Newswire]
▶ RCI Hospitality posts 1Q profit   [Mar-07-18 05:31PM  Associated Press]
▶ RCI Hospitality reports 4Q loss   [Feb-14-18 05:35PM  Associated Press]
▶ RCI Receives Anticipated Nasdaq Letter   [Jan-03-18 04:24PM  PR Newswire]
▶ RCI Extends Filing Date of Annual Report   [Dec-13-17 05:26PM  PR Newswire]

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