The EPS of GEN Restaurant Group, Inc. Class A (GENK) has shown volatility in recent quarters, with a significant decrease from $0.93 in Q2 2023 to $0.061 in Q2 20241. This volatility can be attributed to several factors:
- Revenue Growth: While total revenue increased by 15.9% to $53.9 million in Q2 2024 compared to the same period in 2023, this growth did not translate into a proportional increase in EPS2. This discrepancy suggests that the cost structure or operational efficiencies did not keep pace with the revenue growth.
- Expense Factors: The company's income from operations was $1.6 million, which represented only 3.0% of revenue in Q2 2024. This indicates that a significant portion of the revenue was consumed by operational expenses, leaving less room for net income and EPS2. The restaurant-level adjusted EBITDA margin was 19.0%, which, although respectable, does not necessarily lead to high EPS when revenue growth is high.
- Comparability: In Q2 2023, the company had a net income of $4.5 million, which is significantly higher than the $2.1 million reported in Q2 202421. This decline in net income contributes directly to the lower EPS.
- Market Conditions: The broader economic environment, including inflationary pressures, may have impacted consumer spending and, consequently, GENK's revenue and profitability3.
In summary, the volatility in GENK's EPS is primarily driven by the company's revenue growth outpacing its operational efficiency improvements and increased expenses, coupled with a decline in net income and market conditions.
4/13/2025 07:48am
