Aug 27, 2010 10:04 AM PDT
Following Tuesday's announcement of Q4 revenues, Benihana Inc (BNHNA) shares surged 19.6% on 8.3x normal volume and rose another 14.2% on Wednesday. Shares of this nationwide operator of teppanyaki and sushi restaurants have risen 137% since hitting a year-to-date low of $1.56 on March 13th. In an incredibly difficult economic environment for the restaurant industry, Benihana saw Q4 sales increase 5.4% year-over-year.
While short term RSI is indicating that this week's momentum for BNHNA shares may continue, slow stochastics and dramatic overshooting of the stock's 50-day moving average show that a short term pull back could be in store later this week. If not comfortable chasing short term momentum, long term investors should look for an entry point after any correction.
The strong fundamentals of BNHNA should help restore a long term uptrend. At $8.35 tangible book value per share, the stock trades at $0.44 on the dollar. While the company's balance sheet is slightly levered, it boasts an incredibly high trailing interest coverage multiple of 27. Unlike many other publicly traded restaurants, Benihana has been profitable, even when including an asset writedown charge and a revenue decrease of 3.7% in fiscal Q3 (calendar Q4), throughout calendar 2008.
