Westpark Capital Believes RCI Hospitality Holdings (NASDAQ: RICK) Still Has Room to Grow

By Jason Carr

In a report released today, Ishfaque Faruk from Westpark Capital reiterated a Buy rating on RCI Hospitality Holdings (NASDAQ: RICK). The company’s shares opened today at $22.10, close to its 52-week high of $22.72.

Faruk wrote:

“We saw press reports highlighting New York State’s win on a legal fight that places restrictions on the parameters of adult entertainment establishments. This development will negatively impact smaller players in the space that have been operating under a loophole. We believe RICK and some other established players will benefit from this regulatory development, as they have special licenses. New York State is the company’s 3 rd biggest market and will position RICK to grow in the region. Our estimates remain unchanged, but we are already expecting the company’s earnings to grow 40% in F’18. In our view, this de-risks the investment profile of RICK. Thus, we raise our PT to $30 from $29.  New Restrictions in New York market. We have been seeing reports in the media that New York State prevailed on a legal fight that places restrictions on adult entertainment establishments from operating within 500 feet from a church, school, park in most commercial and residential neighborhoods. This ban will affect smaller adult entertainment establishments that have been operating under a loophole called the “60/40” rule, which allowed adult stores to keep operating so long as less than 40% of their floor space was dedicated to adult material. However, several bigger adult entertainment establishments including RICK, will remain unaffected by the court ruling because they possess special adult entertainment licenses.”

Faruk has an average return of 25.5% when recommending RCI Hospitality Holdings.

According to TipRanks.com, Faruk is ranked #4347 out of 4569 analysts.

RCI Hospitality Holdings has an analyst consensus of Moderate Buy.

Based on RCI Hospitality Holdings’ latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $34.52 million and quarterly net profit of $3.76 million. In comparison, last year the company earned revenue of $34.4 million and had a net profit of $5.51 million.

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RCI Hospitality Holdings, Inc. owns and operates adult nightclubs, sports bars/restaurants and media divisions. It operates through the Nightclubs and Bombhells Restaurants and Bars segments. Its brands Include Rick’s Cabaret, Vivid Cabaret, Tootsie’s Cabaret, Club Onyx, Jaguars Club, XTC Cabaret and Bombshells. The company was founded by Robert L. Watters in 1983 and is headquartered in Houston, TX.