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"We rate KONA GRILL INC (KONA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 22.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- KONA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, KONA GRILL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for KONA GRILL INC is rather low; currently it is at 17.82%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.16% significantly trails the industry average.
- You can view the full analysis from the report here: KONA Ratings Report