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The ONE Group Hospitality Inc (STKS)
NASDAQ:STKS

The ONE Group Hospitality (STKS) AI Stock Analysis

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The ONE Group Hospitality

(NASDAQ:STKS)

Rating:52Neutral
Price Target:
$3.50
▲(5.11%Upside)
The stock score is primarily impacted by financial challenges, including net losses and high leverage, which weigh heavily on the overall assessment. However, strong strategic initiatives and revenue growth from recent acquisitions provide a positive outlook, contributing to a higher earnings call score. Technical indicators suggest a moderately neutral stance, while valuation metrics remain weak due to ongoing profitability issues.
Positive Factors
Financial Performance
AEBITDA and margin guidance also above expectations, with cost savings initiatives in place.
Growth Potential
Significant whitespace expansion potential exists across the brand portfolio, both domestically and internationally.
Mergers and Acquisitions
The May 2024 Benihana/RA Sushi acquisition is a transformational event for the ONE Group, more than doubling run rate revenue and adjusted EBITDA.
Negative Factors
Economic Conditions
Economic uncertainty remains an overhang to posting solid SSS growth, with modest negative SSS expected in 1Q25.
Market Sensitivity
The challenging macro environment had a greater impact on Kona Grill and RA Sushi where customers appeared more price-sensitive.
Valuation Concerns
Current valuation reflects a lack of near- to medium-term SSS growth visibility across all brands, complicated by the financing costs of the acquisition of Benihana.

The ONE Group Hospitality (STKS) vs. SPDR S&P 500 ETF (SPY)

The ONE Group Hospitality Business Overview & Revenue Model

Company DescriptionThe ONE Group Hospitality, Inc. (STKS) is a global hospitality company that develops and operates upscale, high-energy restaurants and lounges. The company is best known for its signature restaurant brand, STK, which combines a modern steakhouse and a chic lounge into a vibrant dining experience. The ONE Group also offers hospitality management services, including food and beverage services for hotels, casinos, and other high-end venues.
How the Company Makes MoneyThe ONE Group Hospitality makes money primarily through its owned and managed restaurant operations. Revenue streams include food and beverage sales at its STK restaurants, which are strategically located in major metropolitan cities and travel destinations worldwide. In addition to direct restaurant sales, the company earns income by providing hospitality management services, which involve overseeing food and beverage operations for third-party venues. This includes consulting services and management fees. The company's revenue is further supported by strategic partnerships and licensing agreements, which allow for brand expansion and increased market presence.

The ONE Group Hospitality Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 6.73%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth and profitability driven by strategic acquisitions and expansion. However, challenges like comparable sales decline, net loss, and increased operating expenses were notable concerns. The company's strategic initiatives and synergies from acquisitions are promising, but the current economic environment poses challenges.
Q1-2025 Updates
Positive Updates
Significant Revenue Growth
First quarter revenues increased by almost 150% to $211 million, driven by contributions from Benihana and RA Sushi and strong transaction growth at STK.
Improved Profitability
Adjusted EBITDA grew by over 230% to $25.2 million, with restaurant-level EBITDA margins of 20.1% for Benihana and 17.7% for STK.
Strategic Expansion
Opened new company-owned Benihana in San Mateo, California, and a new STK restaurant in Topanga, California. Plans to open five to seven new venues in 2025.
Operational Efficiencies and Integration Synergies
Integration of Benihana led to synergies with expected annual savings of at least $20 million by 2026. Efficiencies realized through logistics, reservation systems, and streamlined operations.
Launch of Friends with Benefits Rewards Program
Introduced a new loyalty program to enhance guest experiences and drive customer engagement across multiple brands.
Negative Updates
Comparable Sales Decline
Consolidated comparable sales decreased by 3.2% in the first quarter, with projections indicating further declines in the second quarter.
Net Loss
Reported a net loss available to common stockholders of $6.6 million or $0.21 net loss per share for the first quarter.
Challenges in Casual Dining Segment
Noted pressure from competitors using TV promotions and high-value offerings, requiring increased grassroots marketing efforts.
Increased Operating Expenses
General and administrative costs increased by 73.8% driven by the Benihana acquisition, and operating expenses increased due to fixed cost deleveraging.
Company Guidance
In the first quarter of fiscal year 2025, The ONE Group reported a significant increase in revenues, reaching $211 million, which marks an almost 150% growth compared to the previous year. This growth was driven by contributions from newly acquired brands, Benihana and RA Sushi, as well as strong performance from new units. The company achieved a robust 4.1% transaction growth at its flagship STK brand and improved restaurant-level EBITDA margins by 50 basis points to 16.4%. Notably, Benihana and STK concepts posted industry-leading margins of 20.1% and 17.7%, respectively. Adjusted EBITDA surged over 230% to $25.2 million, reflecting the effectiveness of strategic initiatives and cost management. The company also emphasized the development of its franchising strategy with plans to open five to seven new venues in 2025, aiming for long-term growth and a target of $5 billion in system-wide sales.

The ONE Group Hospitality Financial Statement Overview

Summary
The company faces financial challenges, including net losses and high leverage. Although gross profit margins are strong, the negative net profit margin and high debt levels are concerning. Cash flow from operations is robust, but negative free cash flow and substantial capital expenditures limit financial flexibility.
Income Statement
40
Negative
The company's gross profit margin for TTM is approximately 56.5%, indicating a healthy ability to cover its cost of goods sold. However, the net profit margin is negative due to a net loss, highlighting challenges in achieving profitability. Revenue growth is volatile, with a decline noted in the most recent TTM period compared to the previous year. EBIT and EBITDA margins are low, reflecting modest operational efficiency.
Balance Sheet
35
Negative
The debt-to-equity ratio is high, with total debt significantly exceeding stockholders' equity, indicating potential leverage risks. Return on equity is negative due to net losses, which is a concern for investors. The equity ratio is relatively low, suggesting limited financial flexibility and reliance on debt financing.
Cash Flow
45
Neutral
The operating cash flow to net income ratio is strong, indicating effective cash generation from operations despite net losses. Free cash flow is negative, impacting liquidity and financial flexibility. The company has a high level of capital expenditures, which may constrain cash flow further.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
330.86M673.34M332.77M316.64M277.18M141.94M
Gross Profit
186.94M122.75M65.79M66.58M65.18M20.88M
EBIT
3.93M10.77M9.29M23.39M19.39M7.04M
EBITDA
34.84M40.72M34.02M31.35M38.57M6.79M
Net Income Common Stockholders
-22.64M-15.82M4.72M13.53M31.35M-13.62M
Balance SheetCash, Cash Equivalents and Short-Term Investments
21.92M28.07M21.05M55.12M23.61M24.39M
Total Assets
956.02M959.35M317.25M291.02M229.84M215.57M
Total Debt
310.37M641.02M200.17M183.63M132.64M159.09M
Net Debt
288.44M613.44M179.12M128.51M109.03M134.71M
Total Liabilities
752.89M756.75M249.88M222.43M169.31M193.59M
Stockholders Equity
40.46M205.25M69.18M69.71M61.20M23.18M
Cash FlowFree Cash Flow
-27.37M-27.37M-22.77M-7.38M19.50M-5.36M
Operating Cash Flow
44.19M44.19M30.78M25.25M30.97M431.00K
Investing Cash Flow
-441.39M-441.39M-53.55M-32.63M-11.47M-5.79M
Financing Cash Flow
404.34M404.34M-11.25M39.10M-20.27M17.42M

The ONE Group Hospitality Technical Analysis

Technical Analysis Sentiment
Positive
Last Price3.33
Price Trends
50DMA
3.39
Positive
100DMA
3.26
Positive
200DMA
3.30
Positive
Market Momentum
MACD
0.04
Positive
RSI
51.84
Neutral
STOCH
43.17
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STKS, the sentiment is Positive. The current price of 3.33 is below the 20-day moving average (MA) of 3.60, below the 50-day MA of 3.39, and above the 200-day MA of 3.30, indicating a bullish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 51.84 is Neutral, neither overbought nor oversold. The STOCH value of 43.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STKS.

The ONE Group Hospitality Risk Analysis

The ONE Group Hospitality disclosed 29 risk factors in its most recent earnings report. The ONE Group Hospitality reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

The ONE Group Hospitality Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
BDBDL
74
Outperform
$56.74M14.016.48%1.80%9.38%14.76%
62
Neutral
$6.80B11.082.79%5.80%2.68%-24.86%
53
Neutral
$90.28M92.02%-1.68%-140.83%
52
Neutral
$113.10M-9.31%138.50%-60576.19%
FAFAT
45
Neutral
$43.33M38.50%426.23%10.63%-93.67%
40
Underperform
$35.38M-978.37%-0.61%-200.32%
38
Underperform
$94.60M
-2.48%24.95%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
STKS
The ONE Group Hospitality
3.33
-1.12
-25.17%
BDL
Flanigan's Enterprises
30.53
3.48
12.87%
RRGB
Red Robin Gourmet
5.09
-2.40
-32.04%
NDLS
Noodles & Co
0.78
-1.29
-62.32%
FAT
Fat Brands
2.44
-0.38
-13.48%
THCH
TH International
2.85
-0.95
-25.00%

The ONE Group Hospitality Corporate Events

Executive/Board ChangesShareholder Meetings
The ONE Group Hospitality Elects New Directors at Meeting
Neutral
May 20, 2025

At the 2025 Annual Meeting of Stockholders held on May 20, 2025, The ONE Group Hospitality, Inc. successfully passed all proposals presented. Emanuel Hilario, Scott Ross, and Jonathan Segal were elected as Class III directors for a three-year term. Deloitte & Touche, LLP was ratified as the independent registered public accounting firm for the fiscal year ending December 28, 2025. Additionally, the compensation of the company’s named executive officers was approved on an advisory basis.

The most recent analyst rating on (STKS) stock is a Buy with a $5.00 price target. To see the full list of analyst forecasts on The ONE Group Hospitality stock, see the STKS Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.