20-05-2025
Investors Can Find Comfort In RCI Hospitality Holdings' (NASDAQ:RICK) Earnings Quality
The market for RCI Hospitality Holdings, Inc.'s (NASDAQ:RICK) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.
Our free stock report includes 3 warning signs investors should be aware of before investing in RCI Hospitality Holdings. Read for free now.
Importantly, our data indicates that RCI Hospitality Holdings' profit was reduced by US$27m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. In the twelve months to March 2025, RCI Hospitality Holdings had a big unusual items expense. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of RCI Hospitality Holdings.
As we discussed above, we think the significant unusual expense will make RCI Hospitality Holdings' statutory profit lower than it would otherwise have been. Because of this, we think RCI Hospitality Holdings' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into RCI Hospitality Holdings, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 3 warning signs with RCI Hospitality Holdings, and understanding them should be part of your investment process.
This note has only looked at a single factor that sheds light on the nature of RCI Hospitality Holdings' profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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