Scores Holdings (SCRH)

[badman]

Rick’s Cabaret International Grows through Acquisitions


This is a good example of what SCRH could be worth soon. When they start posting quarterlys again we will see the earnings that have been made but not made public. SCRH is going to be a gold mine soon with the opening of SCORES ATLANTIC CITY.


I raise my estimate to $ 0.50 cents U.S. a share within the next 12 months. Yes. SCRH is a risk but a risk with a nice payday!

oldmanbadman rdncoic Waiting for July :) :) :)

This $84 million company currently trades at 10.64 times earnings. In contrast, another adult entertainment company, Scores Holdings (OTN: SCRH) is valued at 30 times earnings. Since there are very few adult entertainment companies listed in the stock market, it would be better to compare its valuation with restaurant stocks. Darden Restaurants Inc. (NYSE: DRI) is valued at 15 times earnings and Ignite Restaurant Group Inc. (NASDAQ: IRG) trades at 35 times earnings. The reason for the undervaluation of Rick’s Cabaret is simple. Ethical investors do not invest in so-called sin companies in the market. This is the reason why the stock has traded at low valuations despite its strong financial performance. A good catalyst to unlocking its real value would be to start paying dividends to investors over the coming years.


Rick’s Cabaret International Grows through Acquisitions

Adult entertainment operator, Rick’s Cabaret International (NASDAQ: RICK), announced this week that it has agreed to buy the remaining 50 percent stake in a new adult nightclub in Los Angeles County. Through Rick’s Cabaret subsidiary, it will use 100,000 restricted shares of common stock to make the purchase of the club. The club is located near major Los Angeles area freeways and is expected to open in June.

Earlier this month, Rick’s Cabaret had completed the acquisition of a second adult business in midtown Manhattan for $3 million. Rick’s Cabaret paid $1.5 million in cash and the remaining $1.5 million in 6 percent promissory notes convertible into Rick’s Cabaret shares at a price of $10.25. Management is optimistic about this purchase saying that it is extremely rare to find a venue for a new gentlemen’s club in Manhattan. With this transaction, the company entered into a new 20 year lease for the five story building. It plans to renovate the building immediately and will use the first three floors for the club.

The company has been acquiring adult clubs to boost its growth. Last year, it acquired nine operating locations and two other licensed locations under development. It paid a total of $26 million for the clubs and $10 million for the related real estate. It financed this acquisition through 9.5 percent seller notes; interest payable over 12 years. It also used its internally generated cash flow to fund these deals. Note that the company has an average operating cash flow of $19 million a year.

These deals have translated to above average financial performance. For the last five years, sales have grown by an average of 24.36 percent a year. This is higher than the industry’s growth of 13 percent and translates into steady earnings per share growth of 9.66 percent a year and net profit margins of 15 percent. Analysts expect Rick’s Cabaret to earn $1.20 per share this year, which is a growth of 48 percent compared to the same period last year. The company earlier issued a statement saying that they are comfortable with the estimated earnings per share of $1.20. For the next five years, analysts are projecting growth of 40 percent a year.

This $84 million company currently trades at 10.64 times earnings. In contrast, another adult entertainment company, Scores Holdings (OTN: SCRH) is valued at 30 times earnings. Since there are very few adult entertainment companies listed in the stock market, it would be better to compare its valuation with restaurant stocks. Darden Restaurants Inc. (NYSE: DRI) is valued at 15 times earnings and Ignite Restaurant Group Inc. (NASDAQ: IRG) trades at 35 times earnings. The reason for the undervaluation of Rick’s Cabaret is simple. Ethical investors do not invest in so-called sin companies in the market. This is the reason why the stock has traded at low valuations despite its strong financial performance. A good catalyst to unlocking its real value would be to start paying dividends to investors over the coming years.