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Are Investors Undervaluing RCI Hospitality (RICK) Right Now?

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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 - Free Report) . RICK is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.29 right now. For comparison, its industry sports an average P/E of 16.05. RICK's Forward P/E has been as high as 14.49 and as low as 7.12, with a median of 11.68, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RICK has a P/S ratio of 1.37. This compares to its industry's average P/S of 1.47.

These are only a few of the key metrics included in RCI Hospitality's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, RICK looks like an impressive value stock at the moment.


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