First Watch Restaurant Group (FWRG) AI Stock Analysis

• Market Cap: $1.18B
• Dividend Yield: N/A
• Average Volume (3M): 795.10K
• Price to Earnings (P/E): 64.0
• Beta (1Y): 0.75
• Revenue Growth: 13.95%
• EPS Growth: -26.46%
• Country: US
• Employees: 15,000
• Sector: Consumer Cyclical
• Sector Strength: 63
• Industry: Restaurants
• EPS (TTM): 0.30
• Shares Outstanding: 60,968,674
• 10 Day Avg. Volume: 908,263
• 30 Day Avg. Volume: 795,104
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.98
• Price to Cash Flow (P/CF): 10.80
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.44
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 2.15
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $23.71
• Price Target Upside: 22.22% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

First Watch Restaurant Group shows robust financial performance and significant momentum, driven by revenue growth and strategic expansion plans. However, high valuation metrics and cash flow challenges pose risks. The positive market momentum is tempered by valuation concerns, and operational efficiency improvements are needed to sustain growth.

Positive Factors

Marketing Strategy

Enhanced marketing tactics will be scaled more aggressively, focusing on existing customers and attracting new ones, which is expected to drive flat to positive traffic.

Sales Momentum

First Watch Restaurant Group is expected to see positive sales momentum, driven by menu innovation and leveraging technology to improve service efficiency and customer satisfaction.

Traffic Trends

Off-premises traffic trends have turned positive, expected to remain a positive traffic driver for the brand.

Negative Factors

COGS Margin Pressure

FWRG is currently only carrying 2.8% of menu price, which will lead to some margin pressure on the COGS line.

Commodity Inflation

Management anticipates 8%-9% inflation for FY25 due to pressures in their commodity basket, which could lead to some margin pressure on the cost of goods sold.

Cost Structure

Commodity inflation, particularly with eggs, bacon, coffee, and avocados, is expected to remain high, affecting the company's cost structure.

First Watch Restaurant Group Business Overview & Revenue Model

Company Description

First Watch Restaurant Group (FWRG) is a leading daytime dining concept that operates in the restaurant industry. Established in 1983, First Watch specializes in made-to-order breakfast, brunch, and lunch offerings across its network of company-owned and franchised locations. The company is known for its fresh and innovative menu options, focusing on quality ingredients and a welcoming dining experience.

How the Company Makes Money

First Watch Restaurant Group generates revenue primarily through the sale of food and beverages at its restaurants. The company's revenue model involves both company-owned and franchised locations, allowing for a combination of direct sales and franchise fees. Key revenue streams include in-restaurant dining, takeout, and delivery services. Franchise operations contribute to earnings through initial franchise fees, ongoing royalties based on a percentage of sales, and contributions to marketing funds. The company also benefits from strategic partnerships with suppliers to optimize costs and enhance menu offerings. Additionally, First Watch capitalizes on its brand reputation and customer loyalty to drive repeat business and attract new customers.

First Watch Restaurant Group Financial Statement Overview

Summary

First Watch Restaurant Group shows strong revenue growth and improving profitability with significant gross profit margins. However, there are operational efficiency improvements needed and cash flow challenges due to high capital expenditures.

Income Statement

First Watch Restaurant Group shows strong revenue growth with a growth rate of 14.0% from 2023 to 2024. The gross profit margin improved significantly over time, reaching 78.0% in 2024. The net profit margin increased to 1.9%. However, EBIT and EBITDA margins are relatively low at 3.8% and 5.4% respectively, indicating room for operational efficiency improvements.

Balance Sheet

The company's balance sheet demonstrates moderate stability with a debt-to-equity ratio of 1.04, indicating a balanced use of debt and equity financing. Return on Equity (ROE) is modest at 3.2%, reflecting moderate profitability compared to equity. The equity ratio of 39.3% shows a solid equity base relative to total assets, although there is still significant leverage.

Cash Flow

First Watch Restaurant Group exhibits a strong operating cash flow to net income ratio of 6.11, signifying efficient cash generation from operations. However, the free cash flow is negative, indicating high capital expenditures impacting liquidity. The free cash flow to net income ratio is -0.65, suggesting potential cash flow challenges despite operational strengths.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.02B	891.55M	730.16M	601.19M	342.39M
	Gross Profit
792.81M	190.12M	139.53M	127.55M	29.88M
	EBIT
38.91M	41.27M	16.91M	22.24M	-47.16M
	EBITDA
98.38M	85.36M	54.73M	59.71M	-4.29M
	Net Income Common Stockholders
18.93M	25.39M	6.91M	-2.11M	-49.68M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
33.31M	49.63M	49.67M	51.86M	38.85M
	Total Assets
1.51B	1.27B	1.10B	1.05B	1.01B
	Total Debt
620.51M	606.97M	507.35M	473.97M	637.90M
	Net Debt
587.20M	557.33M	457.68M	422.11M	599.06M
	Total Liabilities
918.97M	705.76M	581.31M	542.49M	686.65M
	Stockholders Equity
595.39M	561.28M	523.13M	504.43M	320.87M
Cash Flow		Free Cash Flow
-12.28M	10.65M	-393.00K	27.29M	-45.34M
	Operating Cash Flow
115.67M	95.34M	62.94M	62.97M	-18.36M
	Investing Cash Flow
-206.65M	-123.37M	-63.11M	-35.68M	-26.97M
	Financing Cash Flow
74.33M	28.07M	-2.02M	-14.27M	73.31M

First Watch Restaurant Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 19.40
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FWRG, the sentiment is Positive. The current price of 19.4 is above the 20-day moving average (MA) of 18.03, above the 50-day MA of 18.49, and above the 200-day MA of 17.67, indicating a bullish trend. The MACD of 0.50 indicates Negative momentum. The RSI at 57.75 is Neutral, neither overbought nor oversold. The STOCH value of 73.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FWRG.

First Watch Restaurant Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PTLO	74 Outperform	$800.49M	23.44	8.16%	―	4.51%	43.99%
FWRG	72 Outperform	$1.18B	63.96	3.27%	―	13.95%	-26.46%
CAKE	71 Outperform	$2.28B	14.39	41.18%	2.15%	4.13%	56.76%
BJRI	69 Neutral	$725.62M	46.85	4.54%	―	1.81%	-15.53%
CBRL	62 Neutral	$964.90M	26.99	7.80%	4.73%	2.26%	-56.99%
Sector *	60 Neutral	$6.86B	11.61	3.16%	4.15%	2.41%	-21.45%
GENK	47 Neutral	$144.03M	31.17	5.12%	―	15.12%	-46.08%

First Watch Restaurant Group Corporate Events

First Watch Adopts Executive Severance Plan

On March 5, 2025, First Watch Restaurant Group, Inc. announced the adoption of an Executive Severance Plan. This plan outlines severance benefits for executive officers in cases of termination without cause or resignation for good reason, including lump sum payments based on salary and target bonuses, as well as healthcare coverage. It also includes provisions for changes in control, offering enhanced benefits if such events occur within two years of a change.

First Watch Surpasses $1 Billion in Revenue Milestone

First Watch Restaurant Group reported a significant milestone in 2024, surpassing $1 billion in total revenues and achieving over $100 million in adjusted EBITDA for the first time. Despite a decrease in income from operations and net income compared to the previous year, the company opened 50 new restaurants across 19 states, bringing the total to 572 system-wide locations. Looking forward, First Watch anticipates continued growth in 2025, with plans to open up to 64 new restaurants and achieve a 20% increase in total revenue.