NEW YORK ( TheStreet) -- Kona Grill (Nasdaq: KONA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- KONA's revenue growth has slightly outpaced the industry average of 11.2%. Since the same quarter one year prior, revenues rose by 15.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- KONA GRILL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KONA GRILL INC continued to lose money by earning -$0.14 versus -$2.46 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus -$0.14).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 233.6% when compared to the same quarter one year prior, rising from -$0.44 million to $0.59 million.
- Net operating cash flow has significantly increased by 52.36% to $1.45 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.91%.
- Powered by its strong earnings growth of 366.66% and other important driving factors, this stock has surged by 46.48% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.