Analyzing Kona Grill (KONA) and Restaurant Brands International (NYSE:QSR)

Restaurant Brands International (NYSE: QSR) and Kona Grill (NASDAQ:KONA) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitability.

Analyst Ratings

This is a summary of recent recommendations for Restaurant Brands International and Kona Grill, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Restaurant Brands International 0 4 12 0 2.75
Kona Grill 0 2 3 0 2.60

Restaurant Brands International currently has a consensus price target of $68.29, indicating a potential upside of 4.81%. Kona Grill has a consensus price target of $6.67, indicating a potential upside of 90.48%. Given Kona Grill’s higher probable upside, analysts clearly believe Kona Grill is more favorable than Restaurant Brands International.

Profitability

This table compares Restaurant Brands International and Kona Grill’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Restaurant Brands International 12.40% 24.53% 4.26%
Kona Grill -14.98% -39.42% -11.31%

Dividends

Restaurant Brands International pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Kona Grill does not pay a dividend. Restaurant Brands International pays out 55.2% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Restaurant Brands International and Kona Grill’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Restaurant Brands International $4.32 billion 3.56 $1.91 billion $1.45 44.93
Kona Grill $179.15 million 0.20 $3.91 million ($2.58) -1.36

Restaurant Brands International has higher revenue and earnings than Kona Grill. Kona Grill is trading at a lower price-to-earnings ratio than Restaurant Brands International, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

76.4% of Restaurant Brands International shares are owned by institutional investors. Comparatively, 50.1% of Kona Grill shares are owned by institutional investors. 3.1% of Restaurant Brands International shares are owned by insiders. Comparatively, 29.2% of Kona Grill shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk and Volatility

Restaurant Brands International has a beta of 1.77, indicating that its share price is 77% more volatile than the S&P 500. Comparatively, Kona Grill has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500.

Summary

Restaurant Brands International beats Kona Grill on 12 of the 15 factors compared between the two stocks.

Restaurant Brands International Company Profile

Restaurant Brands International Inc. is a quick service restaurant (QSR) company. The Company had over 20,000 restaurants in more than 100 countries and the United States territories, as of December 31, 2016. It operates through two segments: Tim Hortons (TH) and Burger King (BK). Tim Hortons restaurants are quick service restaurants with a menu that includes blend coffee, tea, espresso-based hot and cold specialty drinks, baked goods, including donuts, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps and soups, among others. Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken and other specialty sandwiches, French fries, soft drinks and other food items. The Company operates coffee roasting facilities in Hamilton, Ontario and Rochester, New York. The Company sells its raw materials and supplies, including coffee, sugar, paper goods and other restaurant supplies to Tim Hortons restaurants.

Kona Grill Company Profile

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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