First Watch Restaurant Group (FWRG) AI Stock Analysis

• Market Cap: $761.78M
• Dividend Yield: N/A
• Average Volume (3M): 1.13M
• Price to Earnings (P/E): 40.3
• Beta (1Y): 0.99
• Revenue Growth: 17.27%
• EPS Growth: -76.53%
• Country: US
• Employees: 15,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.24
• Shares Outstanding: 61,138,140
• 10 Day Avg. Volume: 1,258,778
• 30 Day Avg. Volume: 1,127,344
• PEG Ratio: 15.01
• Price to Book (P/B): 1.50
• Price to Sales (P/S): 0.77
• P/FCF Ratio: -30.35
• Enterprise Value/Market Cap: 1.94
• Enterprise Value/Revenue: 1.21
• Enterprise Value/Gross Profit: 9.27
• Enterprise Value/Ebitda: 13.59
• 1Y Price Target: $20.18
• Price Target Upside: 61.96% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): 0.22
• Revenue Forecast (FY): $1.39B

• Rating: 52 Neutral
• Price Target: $12.50 ▲(0.32% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is held back primarily by mixed financial quality (thin margins, negative free cash flow, and elevated leverage) and weak technicals (broad downtrend despite oversold conditions). A positive earnings outlook and solid growth plan provide support, but an expensive valuation limits upside flexibility.

Positive Factors

Unit growth and new-unit outperformance

Sustained, scalable unit growth with new units running ≈19% above underwriting signals durable unit economics. Faster-than-modeled openings and stronger early sales accelerate payback, expand system sales, and create optionality for franchising and long-term footprint scaling.

Multi-year revenue expansion and positive operating cash flow

Revenue climbed from $342M in 2020 to $1.22B in 2025 while operating cash flow remained positive and rose to $126M in 2025. This durable top-line scale and operating cash generation support reinvestment, rollouts, and franchise support over the medium term.

Employee and culture strength reducing labor friction

Strong employer brand, lower turnover and higher applicant flow are durable advantages in labor-intensive restaurants. Consistent staffing quality reduces training and hiring costs, supports service consistency, and underpins reliable unit-level execution as the chain scales.

Negative Factors

Thin and compressing GAAP margins

Consolidated margins are slim and have recently compressed, leaving little buffer against input cost inflation or traffic weakness. Juvenile restaurant costs, G&A timing and equity comp further pressure GAAP profitability, limiting long-term cash retention from reported earnings.

Persistently negative free cash flow

Negative FCF amid rising capex reflects heavy capital intensity for new builds and remodels. Durable negative FCF constrains internal funding for growth, increases reliance on external financing, and lowers resilience to cyclical traffic or cost shocks over the medium term.

Elevated leverage reducing financial flexibility

Debt-weighted capital structure limits flexibility during downturns and raises fixed obligations as the chain expands. With thin margins and negative FCF, elevated leverage increases refinancing and interest-rate risk, constraining discretionary investments or opportunistic spend.

First Watch Restaurant Group Business Overview & Revenue Model

Company Description

First Watch Restaurant Group, Inc. operates and franchises restaurants under the First Watch trade name. As of March 23, 2022, it operated 341 company-owned restaurants and 94 franchised restaurants in 28 states in the United States. The company was formerly known as AI Fresh Super Holdco, Inc. and changed its name to First Watch Restaurant Group, Inc. in December 2019. First Watch Restaurant Group, Inc. was founded in 1983 and is headquartered in Bradenton, Florida.

How the Company Makes Money

First Watch Restaurant Group generates revenue through its chain of restaurants, primarily by selling food and beverages to customers dining in or ordering takeout. The company’s core revenue streams include sales from breakfast, brunch, and lunch menu items, which are priced at a premium due to the emphasis on fresh, high-quality ingredients and unique offerings. Additional revenue is derived from catering services and special events. FWRG also benefits from strategic partnerships with suppliers and distributors that provide quality ingredients at competitive prices, enhancing profit margins. The company's robust marketing strategies and brand loyalty initiatives contribute to repeat business and increased customer traffic, further driving revenue growth.

First Watch Restaurant Group Financial Statement Overview

Summary

Strong multi-year revenue expansion and positive operating cash flow are offset by cooling growth in 2025, thin and compressing margins (net and EBITDA), elevated leverage, and persistently negative recent free cash flow driven by higher capital intensity.

Income Statement

Revenue has expanded strongly over the last several years (from $342M in 2020 to $1.22B in 2025), but the growth rate has cooled meaningfully in 2025 (4.5% vs. 13.9% in 2024). Profitability has recovered from the 2020 loss to consistent positive net income since 2021, yet net margins remain thin (about 1.6% in 2025, down from ~2.8% in 2023). EBITDA margin also compressed in 2025 (6.96% vs. 9.68% in 2024), signaling rising cost pressure or heavier reinvestment.

Balance Sheet

Leverage remains elevated for a restaurant operator, with debt-to-equity around 1.18x in 2025 (improved vs. 1.36x in 2024, but still higher than 2021–2022 levels). Equity has grown over time ($626M in 2025 vs. $321M in 2020), and returns on equity are positive, but modest (~3.1% in 2025), reflecting low net profitability. Overall, the balance sheet is improving but still meaningfully debt-funded, which can reduce flexibility if traffic or costs weaken.

Cash Flow

Operating cash flow is positive and rising ($126M in 2025 vs. $116M in 2024), which supports day-to-day funding. However, free cash flow has been negative in most recent years (-$31M in 2025 and -$12M in 2024), and it has deteriorated versus 2023’s positive level, indicating higher capital spending and/or working-capital drag. Cash generation quality is mixed, with free cash flow running below net income in 2024–2025 (negative free cash flow to net income).

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.22B	1.02B	891.55M	730.16M	601.19M
Gross Profit	159.44M	792.81M	190.12M	139.53M	124.23M
EBITDA	108.78M	98.38M	85.36M	52.05M	52.85M
Net Income	19.43M	18.93M	25.39M	6.91M	-2.11M
Balance Sheet
Total Assets	1.74B	1.51B	1.27B	1.10B	1.05B
Cash, Cash Equivalents and Short-Term Investments	21.25M	33.31M	49.63M	49.67M	51.86M
Total Debt	739.60M	809.55M	606.97M	507.35M	473.97M
Total Liabilities	1.12B	918.97M	705.76M	581.31M	542.49M
Stockholders Equity	626.28M	595.39M	561.28M	523.13M	504.43M
Cash Flow
Free Cash Flow	-30.99M	-12.28M	10.65M	-393.00K	27.29M
Operating Cash Flow	125.91M	115.67M	95.34M	62.94M	62.97M
Investing Cash Flow	-213.76M	-206.65M	-123.37M	-63.11M	-35.68M
Financing Cash Flow	75.79M	74.33M	28.07M	-2.02M	-14.27M

First Watch Restaurant Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 12.46
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FWRG, the sentiment is Negative. The current price of 12.46 is below the 20-day moving average (MA) of 15.43, below the 50-day MA of 15.81, and below the 200-day MA of 16.66, indicating a bearish trend. The MACD of -0.98 indicates Positive momentum. The RSI at 30.08 is Neutral, neither overbought nor oversold. The STOCH value of 14.06 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FWRG.

First Watch Restaurant Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAKE	69 Neutral	$3.14B	21.19	33.74%	2.11%	4.90%	27.14%
BJRI	64 Neutral	$773.74M	17.05	13.26%	―	3.85%	7.57%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
FWRG	52 Neutral	$761.78M	40.35	0.83%	―	17.27%	-76.53%
CBRL	45 Neutral	$720.97M	44.00	3.89%	3.54%	-1.61%	-58.09%
VENU	44 Neutral	$223.49M	-4.76	-40.00%	―	―	―

First Watch Restaurant Group Corporate Events

First Watch Issues 2026 Outlook Amid CFO Retirement

First Watch Restaurant Group reported that in fiscal 2025, ended December 28, total revenues rose 20.3% to $1.2 billion and system-wide sales climbed to $1.4 billion, driven by 3.6% same-restaurant sales growth, modest positive traffic, and the opening of 64 new restaurants across 23 states to reach 633 locations. Despite higher Adjusted EBITDA and net income, income from operations and restaurant-level margins declined, while Q4 2025 saw sharply higher profitability, and on February 20, 2026 the company’s long-serving CFO Mel Hope notified his intention to retire as First Watch issued a 2026 outlook calling for double-digit revenue growth, up to 63 new units and continued expansion of its digital marketing platform.

The company’s 2026 guidance projects 1%–3% same-restaurant sales growth, 12%–14% total revenue growth and Adjusted EBITDA of $132 million to $140 million, supported by planned capital expenditures of up to $160 million primarily for new builds and remodels. Management reiterated long-term targets for low double-digit annual unit growth and mid-teens restaurant sales and Adjusted EBITDA growth, underscoring a strategy to scale the concept toward a potential footprint of more than 2,200 U.S. restaurants while managing leadership succession in the finance function.

The most recent analyst rating on (FWRG) stock is a Buy with a $19.00 price target. To see the full list of analyst forecasts on First Watch Restaurant Group stock, see the FWRG Stock Forecast page.

First Watch Adds Tech-Focused Director After Advent Exit

On December 23, 2025, First Watch Restaurant Group announced the immediate resignations of directors Tricia Glynn and David Paresky, both tied to the exit of Advent International’s equity investment in the company, with the board emphasizing that there were no disagreements related to operations, policies or practices and simultaneously reducing its size from ten to nine members. On the same day, the board appointed technology entrepreneur and MikMak founder and CEO Rachel Tipograph as a Class II director, effective December 29, 2025, underscoring First Watch’s push to deepen its capabilities in digital transformation and customer acquisition as it continues to scale its daytime dining brand nationwide.

The most recent analyst rating on (FWRG) stock is a Buy with a $23.00 price target. To see the full list of analyst forecasts on First Watch Restaurant Group stock, see the FWRG Stock Forecast page.