Kona Grill (NASDAQ: KONA) and Del Frisco’s Restaurant Group (NASDAQ:DFRG) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, profitability, institutional ownership, valuation and earnings.

Profitability

This table compares Kona Grill and Del Frisco’s Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kona Grill -14.98% -39.42% -11.31%
Del Frisco’s Restaurant Group 3.73% 7.39% 4.77%

Risk and Volatility

Kona Grill has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500. Comparatively, Del Frisco’s Restaurant Group has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Kona Grill and Del Frisco’s Restaurant Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kona Grill 0 2 3 0 2.60
Del Frisco’s Restaurant Group 0 3 2 0 2.40

Kona Grill currently has a consensus target price of $6.67, indicating a potential upside of 118.58%. Del Frisco’s Restaurant Group has a consensus target price of $18.75, indicating a potential upside of 33.93%. Given Kona Grill’s stronger consensus rating and higher probable upside, research analysts plainly believe Kona Grill is more favorable than Del Frisco’s Restaurant Group.

Insider & Institutional Ownership

50.1% of Kona Grill shares are held by institutional investors. Comparatively, 99.2% of Del Frisco’s Restaurant Group shares are held by institutional investors. 29.2% of Kona Grill shares are held by company insiders. Comparatively, 2.4% of Del Frisco’s Restaurant Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Kona Grill and Del Frisco’s Restaurant Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kona Grill $179.15 million 0.17 $3.91 million ($2.58) -1.18
Del Frisco’s Restaurant Group $356.76 million 0.83 $41.74 million $0.56 25.00

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

Summary

Del Frisco’s Restaurant Group beats Kona Grill on 9 of the 13 factors compared between the two stocks.

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.

About Del Frisco’s Restaurant Group

Del Frisco’s Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco’s Double Eagle Steak House (Del Frisco’s), Sullivan’s Steakhouse (Sullivan’s) and Del Frisco’s Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company’s segments include Del Frisco’s, Sullivan’s and the Grille. Del Frisco’s is a steakhouse concept in the United States. The Del Frisco’s brand’s menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco’s steakhouses in nine states and the District of Columbia. Sullivan’s is a complementary concept to Del Frisco’s.

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