Company Review: Narrowing in on Shares of Kona Grill, Inc. (NASDAQ:KONA)

Value investors may be keeping an eye on the Magic Formula Rank or MF Rank for Kona Grill, Inc. (NASDAQ:KONA). Currently, Kona Grill, Inc. has a MF Rank of 11657. The Magic Formula was created and popularized by Joel Greenblatt in his book “The Little Book That Beats the Market”. Greenblatt’s formula helps identify stocks that are priced attractively with a high earnings yield, or solid reported profits compared to the market value of the company. To spot opportunities in the equity market, investors may be checking for stocks that have the lowest combined MF Rank.

Checking in on some ROIC (Return on Invested Capital) numbers, Kona Grill, Inc. (NASDAQ:KONA)’s ROIC is -0.061231. The ROIC 5 year average is 0.038444 and the ROIC Quality ratio is 3.264253. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a company is at turning capital into profits. ROIC may be a good measure to view when examining whether or not a company is able to invest wisely. ROIC may also be an important metric for the value investor who is trying to determine the company’s moat.

Looking a little bit closer, Kona Grill, Inc. (NASDAQ:KONA) has an EV (Enterprise Value) of 160468. EV represents the complete economic value of a certain company. EV is considered to gauge the theoretical takeover price if a company was to be acquired. EV takes into account more than just the outstanding equity. Debt and cash can have a big impact on a firm’s Enterprise Value. Although two companies may have the same market cap, they may have highly different EV values.

Investors may also be tracking some quality ratios for Kona Grill, Inc. (NASDAQ:KONA). Presently, the company has a Gross Margin (Marx) ratio of 0.20948. This number is based on the research by University of Rochester professor Robert Novy-Marx. Marx believed that a high gross income ratio was a sign of a quality company. Looking further, Kona Grill, Inc. (NASDAQ:KONA) has a Gross Margin score of 40. This score is based on the Gross Margin (Marx) metric using a scale from 1 to 100 where a 1 would be seen as positive, and a 100 would be viewed as negative.

Investors are constantly trying to spot the next great stock to own. Choosing the next winner to pad the portfolio may involve very hard work and a touch of market magic. Analyzing the sea of information about public companies can be a scary task. Many sharp investors will approach the equity markets from many different angles. This may include keeping close tabs on fundamental and technical data. Kona Grill, Inc. has a present Value Composite score of 36. This score falls on a scale from 0 to 100 where a lower score would indicate an undervalued company and a higher score would indicate an overvalued company. This ranking was created by James O’Shaughnessy using six different valuation ratios including price to book value, price to sales, EBITDA to EV, price to cash flow, price to earnings, and shareholder yield.

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