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Kona Grill got roughed up in the recent market sell off. But, coming off of a good quarter, this could be a good time to scoop up shares of KONA.

Company Description

Kona Grill has 25 restaurants across the U.S. offering internationally inspired cuisine. The dining room is a trendy but casual atmosphere.

Topping Estimates

On Jul 26 Kona Grill reported quarterly results that included better than expected earnings. EPS came in at $0.11, 7 cents above the Zacks Consensus Estimate. The company has now beat the street's view in each of the past 6 quarters.

Sales rose 13.6%, to $25.8 million with same-store sales gaining 9.1%. The growing top line combined with better profit margins lead to the 200% increase in net income.

Upward Revisions

Analysts raised their full-year forecasts after the results were released. The average estimate for 2011 is up a dime to $0.14. Next year's projections are coming in at $0.18, a 4 cent increase.

In 2010 Kona lost $0.12 per share, so this is a nice turnaround.


Most valuation metrics are showing quite a premium built in to shares of KONA. The Forward P/E is near 40 times, the PEG is at 2.0 and the P/B is over 3. But, for small companies like this the price to sales can be a more telling metric and at 0.6 times, there stock looks like a reasonable price

Can it Come Back?

Shares of KONA were red hot leading up to the recent down turn, so it is not too surprising that they got beat up so badly. If you can stomach the risk, this could be a good time to get into this Zacks #1 Rank (Strong Buy).

Kona Grill  - ticker KONA>

Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the Zacks Small Cap Trader service

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