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Kona Grill (KONA - Snapshot Report)
is a Zacks #1 Rank (Strong Buy) after posting beats in eight straight quarters and sees higher earnings estimates
Kona Grill, Inc. owns and operates upscale casual dining
restaurants in the United States. Its restaurants offer prepared
food items and alcoholic beverages. As of April 02, 2012, the
company owned and operated 23 restaurants under the Kona Grill
name in 16 states, including Arizona, Colorado, Connecticut,
Florida, Illinois, Indiana, Louisiana, Maryland, Michigan,
Minnesota, Missouri, Nebraska, Nevada, New Jersey, Texas, and
Virginia. Kona Grill, Inc. is based in Scottsdale, Arizona.
KONA Tops Expectations for Eight Straight Quarters
Kona Grill has beaten the Zacks Consensus Estimate in each of the
last eight quarters. Over the course of the last six beats, the
stock has not really moved too much. Only two times the stock
moved more than 6%. One of those moves was following the December
2010 quarter where the company beat earnings by 16% and the stock
rose just about 7%.
Following the September 2011 quarter, the stock traded lower by a
little more than 8%. The company ended up beating earnings by 33%
and reported in line revenues. This was a deceleration from the
massive beat in the prior quarter, which came in at 175% ahead of
Kona Grill Recently Reported Earnings
On February 9, 2012 the company reported revenue of $23 million
roughly $1 million more than the Zacks Consensus Estimate and
higher than the $22 million reported in the year ago period. EPS
of $0.12 was $0.11 ahead of the estimate or a 1,100% beat.
the report, the stock moved higher by 2.5%.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up
their earnings estimates for 2012. The Zacks Consensus Estimate
for 2012 EPS moved from $0.23 in January 2012 to the current
level of $0.69. The 2013 estimate spiked higher following the
recent earnings release, moving from $0.32 in January to the
current level of $0.40.
Kona Grill valuation picture is pretty much right in line with the
industry average for the metrics that an aggressive growth
investor will look at. The trailing twelve months and forward PE
of 20x is slight ahead of the 17x and 15x industry average,
respectively. The price to book multiple shows the largest
premium of all the metrics, clocking in at 3.25x compared to 2.44x
for the industry average. Price to sales is a low 0.5x, but still
ahead of the industry average of 0.4x.
When we look at the price and consensus chart for Kona Grill, we
see a stock that has significantly trailed the earnings estimates
for the stock. Generally when we see such a large gap between the
earnings lines and the stock price, it is an indication that the
stock is undervalued. In the case of Kona Grill, the two year
streak of positive earnings surprises needs to see more
significant increases in revenue, which has remained in the low
20's over the last six quarters. Kona Grill is a Zacks #1 Rank
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service You can follow him at twitter.com/bbolan1