NEW YORK (TheStreet) -- Shares of Kona Grill, Inc. (KONA) are up 2.87% to $20.06 in early trading on Monday after KeyBanc (KEY) - Get KeyCorp Report and Wunderlich both initiated coverage with a "buy" rating this morning.
KeyBanc has a $24.00 price target, while Wunderlich has a $28.00 price target.
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Separately, TheStreet Ratings team rates KONA GRILL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate KONA GRILL INC (KONA) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 17.5%. 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.
- Net operating cash flow has significantly increased by 340.61% to $3.75 million when compared to the same quarter last year. In addition, KONA GRILL INC has also vastly surpassed the industry average cash flow growth rate of -3.34%.
- Compared to its closing price of one year ago, KONA's share price has jumped by 75.08%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- KONA's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that KONA's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
- 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, KONA GRILL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: KONA Ratings Report