Del Frisco’s Restaurant Group (DFRG) versus Kona Grill (KONA) Head-To-Head Review

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

Valuation and Earnings

This table compares Del Frisco’s Restaurant Group 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
Del Frisco’s Restaurant Group	$356.76 million	0.84	$41.74 million	$0.56	25.27
Kona Grill	$179.15 million	0.18	$3.91 million	($2.58)	-1.22

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.

Analyst Recommendations

This is a summary of current recommendations and price targets for Del Frisco’s Restaurant Group and Kona Grill, as provided by MarketBeat.com.

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

Del Frisco’s Restaurant Group currently has a consensus target price of $18.75, suggesting a potential upside of 32.51%. Kona Grill has a consensus target price of $6.67, suggesting a potential upside of 111.64%. Given Kona Grill’s stronger consensus rating and higher possible upside, analysts plainly believe Kona Grill is more favorable than Del Frisco’s Restaurant Group.

Risk & Volatility

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

Insider and Institutional Ownership

58.5% of Kona Grill shares are held by institutional investors. 2.4% of Del Frisco’s Restaurant Group shares are held by company insiders. Comparatively, 29.2% of Kona Grill shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

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

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

Summary

Del Frisco’s Restaurant Group beats Kona Grill on 8 of the 13 factors compared between the two stocks.

Del Frisco’s Restaurant Group Company Profile

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.

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.