Are Investors Undervaluing RCI Hospitality (RICK) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is RCI Hospitality (RICK). RICK is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 8.81, which compares to its industry's average of 19.28. Over the past 52 weeks, RICK's Forward P/E has been as high as 10.10 and as low as 2.66, with a median of 7.01.
RICK is also sporting a PEG ratio of 0.73. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RICK's PEG compares to its industry's average PEG of 1.64. RICK's PEG has been as high as 0.73 and as low as 0.27, with a median of 0.49, all within the past year.
We should also highlight that RICK has a P/B ratio of 0.95. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. RICK's current P/B looks attractive when compared to its industry's average P/B of 1.32. Over the past 12 months, RICK's P/B has been as high as 1.53 and as low as 0.42, with a median of 1.02.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. RICK has a P/S ratio of 0.88. This compares to its industry's average P/S of 0.94.
Finally, our model also underscores that RICK has a P/CF ratio of 8.55. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. RICK's P/CF compares to its industry's average P/CF of 9.15. RICK's P/CF has been as high as 8.85 and as low as 2.41, with a median of 6.54, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that RCI Hospitality is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, RICK feels like a great value stock at the moment.
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