On Thursday, Benchmark raised the stock price target for Kura Sushi USA Inc . (NASDAQ:KRUS) to $115, up from the previous target of $90, while maintaining a Buy rating on the stock. This adjustment follows the company's announcement of its fiscal fourth quarter 2024 results on Wednesday, November 6, which surpassed consensus expectations on multiple fronts.
Kura Sushi reported quarterly revenues of $66 million, exceeding the forecasted $64 million. This revenue boost was attributed to better-than-anticipated same-store sales (SSS), which declined by 3.1% compared to the expected 7.1% decrease. The SSS showed significant improvement throughout the quarter, nearing a 0% change in the latter half, indicating a recovery in customer visit frequency.
The company's restaurant-level margins also outperformed expectations, reaching 20.9% against the predicted 20%. This was largely due to more efficient labor and food cost management.
These positive financial metrics were reflected in the company's adjusted earnings per share (AEPS) and adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA), which came in at $0.09 and $5.5 million, respectively, surpassing the consensus estimates of $0.00 in AEPS and $4.6 million in AEBITDA.
Following the strong performance in the fourth quarter, which ended in August, management indicated that the positive trends have continued into the first quarter of the fiscal year. This ongoing momentum contributed to Benchmark's decision to maintain a bullish stance on Kura Sushi with a raised price target, signaling confidence in the company's prospects for the fiscal year 2025.
In other recent news, Kura Sushi USA Inc. has been under the analytical lens of Piper Sandler, which raised its price target for the company to $98 from $63, while maintaining a neutral stance. This adjustment came after Kura Sushi announced its Fiscal 4Q24 results, revealing a decrease in same-store sales by 3.1%, a more favorable outcome than the expected 6.4% drop. Despite this, the company's business trends have shown significant improvement.
In addition, Kura Sushi provided its revenue guidance for FY2025e, projecting a range between $275 million and $279 million. The company's management hinted at these numbers potentially being conservative during the earnings call.
In terms of expansion, Kura Sushi plans to open 14 new units during the current Fiscal Year, a move that could boost the company's growth by over 20%. The company also anticipates that its general and administrative expenses for FY2025e will be approximately 13.5% of sales, suggesting continued leverage in this area. These are among the recent developments for Kura Sushi, as highlighted by the Piper Sandler analyst.
InvestingPro Insights
Kura Sushi USA Inc. (NASDAQ:KRUS) continues to demonstrate strong growth potential, aligning with Benchmark's bullish outlook. According to InvestingPro data, the company's revenue growth stands at an impressive 26.91% for the last twelve months as of Q4 2024, with quarterly revenue growth at 20.18%. This robust growth trajectory supports the InvestingPro Tip that analysts anticipate sales growth in the current year.
However, investors should note that Kura Sushi's profitability remains a concern. An InvestingPro Tip indicates that the company is not profitable over the last twelve months, which is reflected in its negative operating income of -$9.95 million. This aligns with another tip suggesting that analysts do not anticipate the company will be profitable this year.
Despite these challenges, Kura Sushi has shown remarkable market performance. The stock has delivered a strong return of 92.38% over the last three months and 64.23% over the past year, as per InvestingPro data. This performance underscores the InvestingPro Tip highlighting the company's high return over the last year.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Kura Sushi, providing a deeper understanding of the company's financial health and market position.
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