RCI Hospitality Expands Portfolio With Flight Club Acquisition

RCI Hospitality Holdings, Inc. RICK has completed the acquisition of Flight Club, a prominent gentlemen's club, located near Detroit Metro Airport.The total purchase price was $11 million, including $3 million in cash, $5 million in seller financing at 8% and $3 million in cash for the associated real estate.Benefits of the AcquisitionThe strategic acquisition aligns with the company’s portfolio of high-end clubs with restaurants in key cities. It marks the first club purchase since the launch of RICK’s 5-Year 'Back to Basics' Capital Allocation Plan. This acquisition is expected to contribute approximately $2 million in annualized adjusted EBITDA.The 10,000-square-foot property in Inkster, MI, has been recently renovated and offers upscale entertainment. The business is well-established and is expected to benefit from RICK’s marketing, purchasing and systems expertise.RICK’s Focus on Back to Basics & Capital Allocation StrategiesThe company’s Back-to-Basics approach aims to improve business conditions in response to economic challenges. RICK focuses on enhancing the efficiency and profitability of its locations. This initiative emphasizes increasing same-store sales, improving margins and rebranding underperforming locations for better results.During fourth-quarter 2024 earnings call, the company highlighted significant progress with the Back-to-Basics plan. This includes continuing to buy back more shares in the first quarter of 2025. The company also divested four underperforming Bombshells locations, closed the Denver food hall, reduced Bombshells-related debt and stopped franchising.Looking ahead, the company plans to focus on its core nightclub businesses and pursue new acquisitions. For Bombshells, the company aims to improve the performance of existing locations and complete the remaining three units under construction.Regarding capital allocation, the company expects to generate more than $250 million in free cash flow in the next five years. Half of this will be used for club acquisitions and debt repayment, while the other half will be directed toward share buybacks and dividends.RICK Stock Price PerformanceImage Source: Zacks Investment ResearchShares of the company have gained 25.1% in the past three months compared with the Zacks Leisure and Recreation Services industry’s 7.4% growth. The company is benefiting from consistent progress with its Back-to-Basics approach and a strong capital allocation strategy. These efforts are driving operational improvements and enhancing its shareholder value. Also, the focus on enhancing the company’s existing portfolio bodes well for its growth prospects.RICK’s Zacks Rank & Key PicksRCI Hospitality currently has a Zacks Rank #5 (Strong Sell).Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:Trip.com Group Limited TCOM currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.TCOM delivered a trailing four-quarter earnings surprise of 42.8%, on average. The stock has surged 81.5% in the past year. The Zacks Consensus Estimate for TCOM’s 2025 sales and earnings per share (EPS) indicates growth of 15.1% and 7.4%, respectively, from the year-ago levels.Carnival Corporation & plc CCL currently carries a Zacks Rank #2 (Buy). CCL delivered a trailing four-quarter earnings surprise of 326.4%, on average. The stock has surged 57% in the past year.The Zacks Consensus Estimate for CCL’s fiscal 2025 sales and EPS indicates growth of 4.1% and 24.7%, respectively, from the year-ago levels.Royal Caribbean Cruises Ltd. RCL currently carries a Zacks Rank #2. RCL delivered a trailing four-quarter earnings surprise of 16.2%, on average. The stock has surged 88.2% in the past year.The Zacks Consensus Estimate for RCL’s 2025 sales and EPS indicates growth of 9.4% and 23.9%, respectively, from the year-ago levels.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carnival Corporation (CCL): Free Stock Analysis Report Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report RCI Hospitality Holdings, Inc. (RICK): Free Stock Analysis Report Trip.com Group Limited Sponsored ADR (TCOM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks