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First Watch Restaurant Group
(NASDAQ:FWRG)
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Rating:52Neutral
Price Target:
$12.00
▼(-0.99% Downside)
Action:Reiterated
Date:08/11/26
The score is held back primarily by constrained financial quality (thin margins, rising leverage, and negative recent free cash flow) and a weak-to-soft technical setup. These risks are partially offset by a relatively positive earnings call narrative centered on sustained unit-driven growth and a stated plan to reach positive free cash flow beginning in 2027, though valuation remains demanding at a 40.75 P/E.
Positive Factors
Attractive unit economics and accelerating unit growth
Recent restaurant cohorts are outperforming underwriting, with strong three-year sales and high cash-on-cash returns. Durable unit-level profitability and a large pipeline (>100) create a repeatable, capital-efficient growth engine that supports scalable system expansion and long-term value creation.
Negative Factors
Elevated and rising leverage
Leverage has increased significantly as the company funds rapid expansion. Higher debt loads reduce financial flexibility, heighten interest-rate and refinancing risk, and constrain management's ability to absorb operational shocks or pursue opportunistic investments while maintaining investment-grade-like stability.
Read all positive and negative factors
Positive Factors
Negative Factors
Attractive unit economics and accelerating unit growth
Recent restaurant cohorts are outperforming underwriting, with strong three-year sales and high cash-on-cash returns. Durable unit-level profitability and a large pipeline (>100) create a repeatable, capital-efficient growth engine that supports scalable system expansion and long-term value creation.
Read all positive factors
First Watch Restaurant Group Key Performance Indicators (KPIs)
Any
Revenue by Segment
Splits revenue into company‑owned restaurants, franchise royalties/fees and other streams, highlighting whether growth and margins are being driven by capital‑intensive store openings or the more scalable, recurring income from franchising and corporate services.
Splits revenue into company‑owned restaurants, franchise royalties/fees and other streams, highlighting whether growth and margins are being driven by capital‑intensive store openings or the more scalable, recurring income from franchising and corporate services.
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The Fly
The FlyFirst Watch Restaurant Group (FWRG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$780.66M
Dividend YieldN/A
Average Volume (3M)1.13M
Price to Earnings (P/E)43.9
Beta (1Y)1.19
Revenue Growth19.27%
EPS Growth332.49%
CountryUS
Employees18,000
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.30
Shares Outstanding61,712,437
10 Day Avg. Volume1,258,778
30 Day Avg. Volume1,127,344
Financial Highlights & Ratios
PEG Ratio14.95
Price to Book (P/B)1.50
Price to Sales (P/S)0.77
P/FCF Ratio-30.35
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$18.86Price Target Upside55.59% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)0.12
Revenue Forecast (FY)$1.39B
First Watch Restaurant Group Business Overview & Revenue Model
Company Description
First Watch Restaurant Group, Inc. oversees and licenses restaurant operations under the First Watch brand. As of March 23, 2022, its extensive presence included 341 company-owned eateries and 94 franchised outlets, operating across 28 U.S. states...
How the Company Makes Money
First Watch primarily makes money by selling food and beverages to guests in its restaurants. Its core revenue stream is restaurant sales generated at company-owned locations, which reflect guest traffic and average check, supported by menu pricin...
First Watch Restaurant Group Earnings Call Summary
Earnings Call Date:Aug 04, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 09, 2026
Earnings Call Sentiment Positive
The call conveyed a broadly positive operational and growth story: robust revenue growth (15.2%), improving same-restaurant sales (3.4%), strong unit economics for recent restaurant classes, meaningful gains in brand awareness, and disciplined long-term capital allocation targeting self-funded growth and positive free cash flow beginning 2027. The primary near-term concern is margin pressure driven by unexpectedly high demand for beef-based LTOs (adding ~100 bps to COGS) and persistent labor/commodity inflation, which led to a revision of adjusted EBITDA guidance. Management frames the margin headwind as temporary and is pursuing mitigation while investing in marketing and innovation that appear to be expanding trial and conversion. Overall, the positives around top-line momentum, unit performance, brand-building and a clear plan for disciplined growth outweigh the temporary margin challenges.Positive Updates
Strong Top-Line Growth
Total Q2 revenue increased 15.2% year-over-year to $354.7 million; same-restaurant sales grew 3.4% versus Q2 2025. Management expects positive same-restaurant sales in each quarter of 2026 and reported sequential traffic improvement culminating in positive traffic in June.
Negative Updates
Near-Term Margin Pressure from Popular Beef LTO
Stronger-than-anticipated demand for beef-based limited-time offerings increased overall COGS by ~100 basis points year-over-year and is cited as the sole reason management adjusted full-year adjusted EBITDA guidance to $133M–$136M. Management characterizes this as temporary but it created near-term margin headwinds.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Top-Line Growth
Total Q2 revenue increased 15.2% year-over-year to $354.7 million; same-restaurant sales grew 3.4% versus Q2 2025. Management expects positive same-restaurant sales in each quarter of 2026 and reported sequential traffic improvement culminating in positive traffic in June.
Read all positive updates
Company Guidance
The company updated 2026 guidance calling for same-restaurant sales growth of 1.5%–3% (positive in every quarter, with Q3 expected at or below the low end), a 2.9% price action in early Q3 (carried pricing ~3.6% for the year), total revenue growth of 12.5%–14% (≈100 bp benefit from recent acquisitions), net new system‑wide restaurants of 60–62 (53–54 company‑owned, 9–10 franchise), full‑year commodity inflation flat to +1.5%, restaurant‑level labor cost inflation 3.5%–4.5%, adjusted EBITDA guidance of $133M–$136M (revised lower due to stronger-than-expected demand for higher‑cost beef LTOs), marketing spend roughly 2% of revenue (up ~40 bp year over year), third‑quarter G&A about $1M below Q2, and capital expenditures reduced to $145M–$150M; longer‑term targets were amended to ~55 system‑wide openings annually (≈50 company, ≈5 franchise), same‑restaurant sales of 2%–4%, total revenue growth of 10%–13%, adjusted EBITDA growth of 11%–14%, G&A growth below revenue growth, a 50 company‑operated new‑store annual target beginning 2027, and positive free cash flow starting in 2027 and rising thereafter.First Watch Restaurant Group Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
48
Neutral
Cash Flow
44
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.32B | 1.22B | 1.02B | 891.55M | 730.16M | 601.19M |
| Gross Profit | 444.17M | 159.44M | 792.81M | 190.12M | 139.53M | 124.23M |
| EBITDA | 102.83M | 103.84M | 98.38M | 85.36M | 52.05M | 52.85M |
| Net Income | 17.81M | 19.43M | 18.93M | 25.39M | 6.91M | -2.11M |
Balance Sheet | ||||||
| Total Assets | 1.82B | 1.74B | 1.51B | 1.27B | 1.10B | 1.05B |
| Cash, Cash Equivalents and Short-Term Investments | 20.48M | 21.25M | 33.31M | 49.63M | 49.67M | 51.86M |
| Total Debt | 1.07B | 1.01B | 809.55M | 606.97M | 507.35M | 473.97M |
| Total Liabilities | 1.19B | 1.12B | 918.97M | 705.76M | 581.31M | 542.49M |
| Stockholders Equity | 634.17M | 626.28M | 595.39M | 561.28M | 523.13M | 504.43M |
Cash Flow | ||||||
| Free Cash Flow | -20.98M | -30.99M | -12.28M | 10.65M | -393.00K | 27.29M |
| Operating Cash Flow | 128.24M | 125.91M | 115.67M | 95.34M | 62.94M | 62.97M |
| Investing Cash Flow | -151.42M | -213.76M | -206.65M | -123.37M | -63.11M | -35.68M |
| Financing Cash Flow | 24.49M | 75.79M | 74.33M | 28.07M | -2.02M | -14.27M |
First Watch Restaurant Group Technical Analysis
Positive
12.12
Price Trends
12.12
Positive
11.93
Positive
13.89
Negative
Market Momentum
0.02
Positive
52.74
Neutral
29.72
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 12.12 is below the 20-day moving average (MA) of 12.52, below the 50-day MA of 12.12, and below the 200-day MA of 13.89, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 52.74 is Neutral, neither overbought nor oversold. The STOCH value of 29.72 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 Risk Analysis
First Watch Restaurant Group disclosed 49 risk factors in its most recent earnings report. First Watch Restaurant Group 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
First Watch Restaurant Group Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $1.48B | 34.17 | 10.97% | ― | 3.54% | 56.84% | |
66 Neutral | $5.84B | 29.21 | 38.83% | 1.35% | 5.66% | 14.01% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
53 Neutral | $1.31B | 49.60 | 5.89% | 1.86% | -4.92% | -54.90% | |
52 Neutral | $780.66M | 43.94 | 2.85% | ― | 19.27% | 332.49% | |
49 Neutral | $115.98M | -1.81 | -29.57% | ― | 5.20% | -6.01% |
* Consumer Cyclical Sector Average
FWRG
First Watch Restaurant Group
12.97
-4.89
-27.38%
BJRI
BJ's Restaurants
66.67
31.21
88.01%
CBRL
Cracker Barrel
58.40
-2.52
-4.13%
CAKE
Cheesecake Factory
111.88
49.65
79.78%
VENU
Venu Holding Corporation
2.05
-13.86
-87.12%
First Watch Restaurant Group Corporate Events
Business Operations and StrategyFinancial Disclosures
First Watch outlines ambitious long-term U.S. growth strategy
Positive
Aug 4, 2026
First Watch Restaurant Group outlined long-term annual growth targets as of August 4, 2026, centered on aggressive restaurant expansion in the U.S. daytime dining segment. The plan calls for about 55 new system-wide openings per year, including ro...
Business Operations and StrategyFinancial Disclosures
First Watch posts strong Q2 results, boosts 2026 outlook
Positive
Aug 4, 2026
First Watch Restaurant Group reported solid financial performance for the second quarter of 2026, covering the thirteen weeks ended June 28, 2026, with total revenues rising 15.2% year over year to $354.7 million and system-wide sales up 14.7% to ...
Business Operations and StrategyExecutive/Board Changes
First Watch Appoints New CFO to Drive Growth
Positive
Jun 8, 2026
On June 8, 2026, First Watch Restaurant Group announced that its board appointed Ashlee Weisser as chief financial officer, effective the same date, following her tenure as senior vice president of financial planning and analysis since October 202...
Executive/Board ChangesShareholder Meetings
First Watch Shareholders Back Directors, Pay and Auditor
Positive
May 21, 2026
On May 20, 2026, First Watch Restaurant Group, Inc. held its Annual Meeting of Stockholders, where investors elected all three Class II director nominees, Irene Chang Britt, Charles Jemley and Rachel Tipograph, to serve until the 2029 annual meeti...
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.