KONA – MONEY MAKER

04/28/11 11:07AM EDT

Kona reported strong sales and earnings last night after the market close, confirming our bullish thesis on KONA.

KONA reported a 7.6% increase in 1Q same-store sales after the close yesterday, bringing the two-year average trend to a very strong +2.6%.  This two-year numbers constitutes a sequential gain of 350 basis points from 4Q10.  Looking to 2Q11, the company is guiding to a conservative 5% print for same-store sales.

Overall, restaurant sales increased 12.3% and restaurant operating margin increased to 14%.  The company stated, in its earnings release, that the company is being impacted by commodity costs but top-line sales have aided management in gaining leverage over these costs and improve profit margins.  Net loss for the quarter was $0.01 per share and the company is guiding to earnings in the second quarter of $0.02 to $0.04 per share.  

See our not from 04/14 titled, "KONA - GAIN ALPHA ON THE KONAVORE DIET", for detail on why we think the stock could trade between $7.50 and $8.00 in the next 12-18 months.  

KONA – MONEY MAKER - KONA POD 1

Howard Penney

Managing Director

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.