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RCI Hospitality Holdings: An Undervalued Company With An Unconventional Business

Casao Capital profile picture
Casao Capital


  • RICK has strong FCF generation with a focus on future growth.
  • The company has enough liquidity to survive through the pandemic.
  • It offers compelling long-term returns for shareholders.

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RCI Hospitality Holdings, Inc. (NYSE:NASDAQ:RICK) is a company that owns restaurants, called Bombshells, and gentlemen clubs under various names, targeting different demographics.

RICK's share price has plummeted due to the lockdown caused by the coronavirus, which forced them to temporarily close their locations. The share price decreased 70% and has recovered slightly since. Currently, as of 18th of May, the share price is around $10. I believe that the current share price does not reflect the long-term potential of the company and the market is strongly punishing RICK due to the lockdown. I am convinced that the company can pull through the pandemic with the cash on hand and additional borrowings, if necessary, making it an attractive company to hold in your portfolio with a long-term perspective. I am going to dive deeper in their financials and business model to explain why I believe RICK has a bright future ahead.


As of 30th of September 2019 (fiscal year close), they operated eight bombshells, all in Texas, and have since then increased the number by two. The restaurants are characterized by a military theme where the waitresses wear uniforms and all the food and drinks have military names. Bombshells are also open for franchising in all 50 states. RICK generates revenue in Bombshells from the sale of alcoholic beverages (58%) and food and merchandise (42%).

As of 30th of September 2019, they operated 38 nightclubs serving mainly businessmen and professionals. The revenue is distributed as follows: 45.7% through service revenues, 38.5% alcoholic beverages, 8.8% food and merchandise and 7% through other sources such

This article was written by

Casao Capital profile picture
I am a student who invests his own money while working in the financial sector.. I focused on companies that I believe have strong potential to provide returns, both in long term compounding strategies as well as shorter term value purchases.

Analyst’s Disclosure: I am/we are long RICK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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