NEW YORK ( TheStreet) -- Kona Grill (Nasdaq: KONA) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • KONA's revenue growth has slightly outpaced the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 13.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 166.66% and other important driving factors, this stock has surged by 62.02% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Net operating cash flow has slightly increased to $1.62 million or 9.28% when compared to the same quarter last year. Despite an increase in cash flow, KONA GRILL INC's average is still marginally south of the industry average growth rate of 16.88%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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 17.20%. Regardless of KONA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, KONA's net profit margin of 3.00% is significantly lower than the same period one year prior.

Kona Grill, Inc. owns and operates upscale casual dining restaurants in the United States. The company operates its restaurants under the 'Kona Grill' name. Kona Grill has a market cap of $53.7 million and is part of the services sector and leisure industry. Shares are up 38.5% year to date as of the close of trading on Tuesday.

You can view the full Kona Grill Ratings Report or get investment ideas from our investment research center.
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