GEN Restaurant Group, Inc. Class A (GENK) AI Stock Analysis

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GEN Restaurant Group, Inc. Class A

(NASDAQ:GENK)

46Neutral

GEN Restaurant Group, Inc. Class A is facing significant challenges in financial performance, with high leverage and negative free cash flow. The technical analysis indicates bearish trends, and the stock appears overvalued with a high P/E ratio. While the recent earnings call provided some positive guidance, concerns about sales decline and increased costs remain. These factors contribute to a cautious overall stock score.

GEN Restaurant Group, Inc. Class A (GENK) vs. S&P 500 (SPY)

Market Cap

$137.87M

Dividend YieldN/A

Average Volume (3M)166.72K

Price to Earnings (P/E)29.8

Beta (1Y)1.36

Revenue Growth15.12%

EPS Growth-46.08%

CountryUS

Employees289

SectorConsumer Cyclical

Sector Strength63

IndustryRestaurants

Share Statistics

EPS (TTM)0.14

Shares Outstanding5,375,752

10 Day Avg. Volume85,169

30 Day Avg. Volume166,715

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.98

Price to Cash Flow (P/CF)7.00

P/FCF Ratio83.80

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$10.00

Price Target Upside141.55% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

GEN Restaurant Group, Inc. Class A Business Overview & Revenue Model

Company DescriptionGEN Restaurant Group, Inc. Class A (GENK) operates within the restaurant industry, focusing on providing a unique dining experience through its Korean BBQ restaurants. The company is known for its innovative approach to casual dining, offering a menu that combines traditional Korean dishes with modern culinary trends. GENK emphasizes a customer-centric model, ensuring quality service and an inviting atmosphere across its locations.

How the Company Makes MoneyGEN Restaurant Group, Inc. generates revenue primarily through the operation of its Korean BBQ restaurants. The company earns money by serving a diverse array of food and beverages to customers who dine at its establishments. Revenue is driven by customer visits, with a focus on enhancing the dining experience to encourage repeat business and attract new customers. Additionally, GENK may leverage strategic partnerships and promotional initiatives to drive traffic and increase sales at its restaurants. The company's financial performance is influenced by factors such as menu pricing, customer satisfaction, operational efficiency, and market trends in the dining industry.

GEN Restaurant Group, Inc. Class A Financial Statement Overview

Summary

GEN Restaurant Group, Inc. Class A faces challenges with profitability and financial stability. The company has fluctuating revenue growth, declining gross profit margins, and weak EBIT/EBITDA margins. The balance sheet shows high leverage, and cash flow concerns are evident with negative free cash flow.

Income Statement

Neutral

GEN Restaurant Group, Inc. Class A has shown fluctuating revenue growth with the most recent year recording a decline in gross profit and net income. While the gross profit margin for 2024 is high at 100%, it suggests inconsistencies in reporting, possibly due to how costs are categorized. The EBIT and EBITDA margins are weak compared to industry standards, indicating challenges in core profitability.

Balance Sheet

Neutral

The company's balance sheet shows a concerning debt-to-equity ratio due to significant debt levels, outpacing stockholders' equity. Stockholders' equity has shown improvement, but remains low relative to total assets, indicating potential financial instability. Return on equity is positive, driven by improvements in net income, yet the high leverage poses risks.

Cash Flow

Negative

Free cash flow has turned negative, showing a decline from previous years and indicating potential liquidity concerns. Operating cash flow remains positive but has decreased, affecting overall financial flexibility. The company needs to manage capital expenditures better to improve cash flow metrics.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
208.38M	181.01M	163.73M	140.56M	62.66M
	Gross Profit
21.92M	24.61M	109.37M	95.87M	41.94M
	EBIT
476.00K	8.09M	12.35M	9.70M	-8.44M
	EBITDA
18.96M	21.61M	19.29M	57.40M	-3.78M
	Net Income Common Stockholders
592.00K	8.41M	10.28M	49.86M	224.00K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
23.68M	32.63M	11.20M	9.57M	7.15M
	Total Assets
240.41M	183.87M	138.88M	31.99M	33.13M
	Total Debt
163.01M	121.07M	121.64M	15.32M	22.63M
	Net Debt
139.33M	88.44M	110.45M	5.75M	15.47M
	Total Liabilities
194.80M	146.35M	144.14M	39.32M	38.80M
	Stockholders Equity
44.12M	8.97M	-10.01M	-1.17M	-8.04M
Cash Flow		Free Cash Flow
-6.00M	5.01M	15.29M	30.32M	-2.34M
	Operating Cash Flow
17.83M	22.16M	23.40M	31.60M	-2.05M
	Investing Cash Flow
-26.80M	-6.31M	2.57M	-10.33M	-4.09M
	Financing Cash Flow
18.00K	5.58M	-24.66M	-18.54M	6.61M

GEN Restaurant Group, Inc. Class A Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.14

Price Trends

50DMA

5.53

Negative

100DMA

6.57

Negative

200DMA

7.56

Negative

Market Momentum

MACD

-0.46

Positive

RSI

31.50

Neutral

STOCH

9.18

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GENK, the sentiment is Negative. The current price of 4.14 is below the 20-day moving average (MA) of 5.25, below the 50-day MA of 5.53, and below the 200-day MA of 7.56, indicating a bearish trend. The MACD of -0.46 indicates Positive momentum. The RSI at 31.50 is Neutral, neither overbought nor oversold. The STOCH value of 9.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GENK.

GEN Restaurant Group, Inc. Class A Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RAVE	69 Neutral	$32.81M	12.31	21.44%	―	2.83%	37.01%
PBPB	59 Neutral	$248.62M	6.27	110.27%	―	-5.86%	672.77%
Sector *	59 Neutral	$11.53B	10.43	-0.22%	4.02%	1.19%	-15.83%
STKS	57 Neutral	$91.84M	―	-11.53%	―	102.35%	-846.68%
DENN	52 Neutral	$153.91M	7.28	-63.40%	―	-2.50%	15.46%
GENK	46 Neutral	$137.87M	29.84	5.12%	―	15.12%	-46.08%
RRGB	41 Neutral	$53.45M	―	92.02%	―	-4.19%	-266.52%

* Consumer Cyclical Sector Average

Performance Comparison

GENK

GEN Restaurant Group, Inc. Class A

4.12

-5.26

-56.08%

DENN

Denny's

3.09

-5.21

-62.77%

RAVE

Rave Restaurant Group

2.18

0.12

5.83%

RRGB

Red Robin Gourmet

2.89

-2.88

-49.91%

PBPB

Potbelly

8.05

-2.02

-20.06%

STKS

The ONE Group Hospitality

2.67

-2.62

-49.53%

GEN Restaurant Group, Inc. Class A Earnings Call Summary

Earnings Call Date: Mar 6, 2025 | % Change Since: -18.66% | Next Earnings Date: May 20, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong revenue growth and successful restaurant openings, with plans for international expansion. However, there were challenges with comparable sales decline, delayed restaurant openings, increased costs, and a net loss in the fourth quarter due to preopening expenses.

Highlights

Exceeding Revenue Projections

For the full year 2024, GEN Restaurant Group reported $208 million in revenue, exceeding their guidance range and analyst expectations.

Strong Fourth Quarter Performance

The fourth quarter saw a 21% year-over-year revenue growth and a 25% year-over-year growth in total adjusted EBITDA.

Successful New Restaurant Openings

Nine new restaurants opened since the year-end call last year, bringing the total restaurant count to 46 locations nationwide.

Positive Comparable Restaurant Sales

Despite a 5.6% decline in 2024, the first two months of 2025 saw a return to growth with a 1% increase in comparable restaurant sales.

International Expansion Plans

GEN announced plans to expand internationally, with at least two locations in South Korea planned for 2025.

Lowlights

Comparable Sales Decline

Same-store sales for 2024 were down 5.6% year-over-year.

Delayed Restaurant Openings

Only six out of the planned 10 to 11 new restaurants opened in 2024 due to delays caused by local and state government permits.

Increased Cost of Goods Sold

Cost of goods sold as a percentage of company restaurant sales increased by 160 basis points in the fourth quarter and 80 basis points for the full year.

Net Loss in Fourth Quarter

Reported a net loss before income taxes of $1.2 million in the fourth quarter, primarily due to preopening costs.

Company Guidance

During the GEN Restaurant Group, Inc.'s fourth quarter and full-year 2024 earnings call, the company reported exceeding its revenue guidance, achieving $208.4 million against a projected range of $200 million to $205 million. They also met their restaurant-level adjusted EBITDA target of 17.7%, which fell within the estimated range of 17% to 18%. General and administrative expenses were kept in check, ending at $18.3 million, within the $18 million to $19 million forecast. The company opened six new restaurants in 2024 and three more in January 2025, with plans to open a fourth shortly after. Despite a 5.6% decline in same-store sales for 2024, they implemented a 3% menu price increase, which did not impact customer traffic, leading to a positive 1% comp sales growth in early 2025. The guidance for 2025 includes a revenue target of $245 million to $250 million and opening 10 to 13 new units, excluding the three already opened in 2025, with an expected restaurant-level adjusted EBITDA margin of 18% or higher.

GEN Restaurant Group, Inc. Class A Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

GEN Restaurant Group Announces Leadership Change

Neutral

Jan 14, 2025

On January 14, 2025, GEN Restaurant Group announced a leadership change as Co-Founder Jae Chang stepped down as Co-CEO but remains a board member. David Kim, the current Chairman and Co-CEO, will now serve as the sole CEO, assuming Chang’s day-to-day responsibilities. This change comes as the company continues its growth strategy, building on the strong foundation established since its inception.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.