Contrasting Kona Grill (KONA) & Good Times Restaurants (GTIM)

Good Times Restaurants (NASDAQ: GTIM) and Kona Grill (NASDAQ:KONA) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, analyst recommendations, institutional ownership and risk.

Valuation & Earnings

This table compares Good Times Restaurants and Kona Grill’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Good Times Restaurants $64.44 million 0.48 -$1.32 million ($0.14) -17.86
Kona Grill $169.52 million 0.12 -$21.62 million ($2.67) -0.75

Good Times Restaurants has higher earnings, but lower revenue than Kona Grill. Good Times Restaurants is trading at a lower price-to-earnings ratio than Kona Grill, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

32.4% of Good Times Restaurants shares are owned by institutional investors. Comparatively, 37.2% of Kona Grill shares are owned by institutional investors. 8.4% of Good Times Restaurants shares are owned by insiders. Comparatively, 29.2% of Kona Grill shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Good Times Restaurants and Kona Grill, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Good Times Restaurants 0 0 1 0 3.00
Kona Grill 0 2 3 0 2.60

Good Times Restaurants currently has a consensus target price of $6.00, suggesting a potential upside of 140.00%. Kona Grill has a consensus target price of $6.17, suggesting a potential upside of 208.33%. Given Kona Grill’s higher possible upside, analysts plainly believe Kona Grill is more favorable than Good Times Restaurants.

Risk & Volatility

Good Times Restaurants has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Kona Grill has a beta of 0.18, meaning that its stock price is 82% less volatile than the S&P 500.

Profitability

This table compares Good Times Restaurants and Kona Grill’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Good Times Restaurants -2.25% -4.44% -3.35%
Kona Grill -15.32% -55.38% -12.50%

Summary

Good Times Restaurants beats Kona Grill on 8 of the 13 factors compared between the two stocks.

About Good Times Restaurants

Good Times Restaurants Inc. operates and franchises Good Times Burgers & Frozen Custard (Good Times) restaurants and Bad Daddy’s Burger Bar concept (Bad Daddy’s). The Company operates through two segments: Good Times Burgers and Frozen Custard restaurants, and Bad Daddy’s Burger Bar restaurants. Good Times is a quick service restaurant concept. The menu of a Good Times restaurant includes hamburgers, cheeseburgers, chicken sandwiches, French fries, onion rings, soft drinks and frozen custard products. Its breakfast menu includes breakfast burritos, orange juice and coffee. Bad Daddy’s operates in the burger casual dining sector and is chef driven, full service, full bar concept. Its menu consists of burgers, salads, sandwiches and appetizers. Its bar focuses on local, craft microbrew beers and specialty cocktails. The Company operates through its subsidiaries, Good Times Drive Thru, Inc., BD of Colorado, LLC, Bad Daddy’s Franchise Development, LLC and Bad Daddy’s International, LLC.

About Kona Grill

Kona Grill, Inc. owns and operates upscale casual dining restaurants under the name Kona Grill. The Company owns and operates approximately 40 restaurants in 20 states throughout the United States and Puerto Rico. Its high-volume upscale casual restaurants feature a global menu of contemporary American favorites and sushi. Its menu items are prepared from scratch at each restaurant location and incorporate over 40 signature sauces and dressings. It also offers a full service bar offering a range assortment of wines, specialty cocktails and beers. Its restaurants seat an average of approximately 290 customers and comprise multiple dining areas. Its dining area, full-service bar, indoor/outdoor patio and sushi bar provide a choice of atmospheres and a range of environments. It locates its restaurants in various areas, such as retail centers, shopping malls, urban entertainment districts and lifestyle centers that are situated near commercial office space and residential housing.

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