kutza44 (< 20)

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Ricks Caberet: up 40%, is it too late to buy? Foolish thoughts appreciated

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February 22, 2010 – Comments (3) | RELATED TICKERS: RICK , VCGH

In January I posted a positive mention of RICK. It was at a price of 10. Today it is at 14.

Since January a lot has happened with Ricks Caberet

1. It signed a letter of intent in the past week to buy out its' largest competitor, essentially doubling the size of the company.

2 Investment advisor Brean Murray began coverage of RICK with a buy rating

3. Earnings per share are projected by C Schwab to increase 70% in 2010 and 30% in 2011.

4. Top line in 1Q increased 16%, although earnings fell 4 cents short of expectations due to advertising.

5. RICK management continues to project earnings of $0.95 to 1.05 per share in 2010. Latest analyst estimates are about .92 per share.

If the present merger can be successfully completed with good integration it is expected that a per share price of 18-25 could be supported during 2011.

Foolish thoughts welcome!!

3 Comments – Post Your Own

#1) On February 22, 2010 at 4:38 PM, bigjoe15 (< 20) wrote:

hello

This company is too aggressive with acquisitions. They pay prime money to purchase clubs with no positive results to the bottom line. They bought that club in Las Vegas for 20 million and it doesn't make a profit. If they don't pay the taxis 2 million (what they call aggressive marketing) they will lose 500k a month. They will never recover this money. There acquisitions are way too aggressive and doesn't do anything to bottom line then create more debt.

Now they will purchase VCG when it was clear VCG had "shady accounting practices" So with 20 clubs VCG is at mid $2.00 but Ricks is at 13??? Wonder why?

Cant see how every other retailer is down 25%-40% a year in business and Ricks is not. Yes "sex-sells" but not in the face of the worse recession and 10% unemployment.

Buyer beware..I expect this company to hit major turbulence when the real numbers surface.

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#2) On February 22, 2010 at 4:58 PM, brickcityman (< 20) wrote:

I expect a degree of legal turbulence to surround this acquisition. VCGH was recently embroiled in legal investigations due to a failed offer to go private.

The shares took a very big dip not long before the "go private" offering was made, which in and of itself is was fishy... Now you have a merger proposition on the heels of that with some very interesting valuation methods. If memory serves the VCG CEO even tried arrange funding for the company using his own life insurance policy.

The smell of desperation appears to be coming from the "Board room" as well as the "Champagne room".

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#3) On May 16, 2010 at 12:41 PM, WPThatcher (29.78) wrote: