KURA SUSHI USA, INC. (KRUS) stock intrinsic value fair value estimate & owner earnings analysis

Kura Sushi USA operates 79 revolving sushi restaurants in 22 U.S. states and Washington, DC (as of the fiscal year ended August 31, 2025). Fiscal 2025 sales were $282.8 million, up 19% from $237.9 million. The company is not yet profitable on a GAAP basis: net loss of $1.9 million in fiscal 2025 and $8.8 million in fiscal 2024. Restaurant-level profit was $52.1 million, 18.4% of sales, but $37.7 million of corporate overhead and $14.0 million of depreciation consume almost all of it. How we measured earnings. We start from operating cash flow, remove the swing from working capital (a $7.4 million inflow in fiscal 2025), deduct stock compensation ($4.7 million) as a real cost, and deduct the part of capital spending that maintains existing restaurants. Capital spending was $46.2 million in fiscal 2025. Using the company's own seven-year average spending of about 20.7% of sales, and treating the portion tied to sales growth as growth spending, our formula leaves $36.9 million as maintenance. On this basis owner earnings per diluted share have been negative in each of the last seven fiscal years: about -$0.82, -$3.01, -$1.52, -$0.30, -$1.53, -$2.20 and -$2.04 for fiscal 2019 through 2025. The median of fiscal 2021 through 2025, the years since the pandemic closures, is about -$1.53. That formula almost certainly overstates the cost of keeping existing restaurants running, because the company states that its spending goes mainly to current and future restaurant openings and renovations as well as maintaining existing restaurants, and does not separate the pieces. As a cross-check we used depreciation (about $14.0 million, roughly 5% of sales) as a stand-in for replacing worn assets. On that basis the business excluding new-restaurant spending produced about negative $1.4 million in fiscal 2025 and negative $2.6 million in fiscal 2024, which is roughly break-even after stock compensation. That break-even view is what we value. Growth: fiscal 2025 owner earnings per share (-$2.04) improved slightly from fiscal 2024 (-$2.20); we assume no improvement in year one. We do not credit growth from new openings. Management expects to open 16 restaurants in fiscal 2026 and raised $64.3 million in a November 2024 follow-on offering, but expansion has been funded by outside capital rather than by the business's own cash flow, and it has not yet produced positive earnings, so we do not treat unit growth as secured or proven. We also do not credit margin recovery, a turnaround or management targets. Bear case: $0. If restaurant-level margin slips from 18.4% while the $37.7 million of corporate overhead stays fixed, the existing restaurants earn less than nothing after stock compensation, and no value can be supported. Base case: $0. Existing restaurants roughly cover their own upkeep and stock compensation, leaving nothing for shareholders that we can evidence. Bull case: $0. The 16 planned openings are the obvious lever, but we have no evidenced figures for the build cost or sales of new units, so we leave them out rather than guess. What could make this wrong: if new restaurants keep opening at healthy returns and overhead is spread across many more units, earnings could be materially higher than we credit. We have valued only what is evidenced today. We could not separate maintenance from expansion spending in the filings, which is why two views of maintenance are shown above.