Kona Grill (NASDAQ: KONA) and Papa John’s International (NASDAQ:PZZA) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, earnings, dividends, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Kona Grill and Papa John’s International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kona Grill 0 2 3 0 2.60
Papa John’s International 0 6 3 0 2.33

Kona Grill presently has a consensus price target of $6.17, indicating a potential upside of 208.33%. Papa John’s International has a consensus price target of $79.25, indicating a potential upside of 39.84%. Given Kona Grill’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Kona Grill is more favorable than Papa John’s International.

Profitability

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

Net Margins Return on Equity Return on Assets
Kona Grill -15.32% -55.38% -12.50%
Papa John’s International 6.12% 4,321.08% 19.07%

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kona Grill $169.52 million 0.12 -$21.62 million ($2.67) -0.75
Papa John’s International $1.71 billion 1.16 $102.82 million $2.90 19.54

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

Dividends

Papa John’s International pays an annual dividend of $0.90 per share and has a dividend yield of 1.6%. Kona Grill does not pay a dividend. Papa John’s International pays out 31.0% of its earnings in the form of a dividend.

Institutional and Insider Ownership

37.2% of Kona Grill shares are owned by institutional investors. Comparatively, 84.2% of Papa John’s International shares are owned by institutional investors. 29.2% of Kona Grill shares are owned by company insiders. Comparatively, 27.7% of Papa John’s International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Kona Grill has a beta of 0.18, indicating that its stock price is 82% less volatile than the S&P 500. Comparatively, Papa John’s International has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500.

Summary

Papa John’s International beats Kona Grill on 10 of the 14 factors compared between the two stocks.

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.

Papa John’s International Company Profile

Papa John’s International, Inc. (Papa John’s) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark Papa John’s. The Company operates through five segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and all other business units. North America is defined as the United States and Canada. Domestic is defined as the contiguous United States. International franchisees are defined as all franchise operations outside of the United States and Canada. As of December 25, 2016, there were 5,097 Papa John’s restaurants in operation, consisting of 744 Company-owned and 4,353 franchised restaurants operating domestically in all 50 states and in 45 countries and territories. It offers pizza along with side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages.

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