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First Watch Restaurant Group (FWRG)
NASDAQ:FWRG
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First Watch Restaurant Group (FWRG) AI Stock Analysis

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FWRG

First Watch Restaurant Group

(NASDAQ:FWRG)

Rating:67Neutral
Price Target:
$19.00
▲(2.21% Upside)
First Watch Restaurant Group's overall score reflects strong earnings call performance and positive technical indicators, offset by high valuation concerns and financial risks related to debt and cash flow. The company's growth potential is promising, but careful management of financial metrics is crucial for sustained success.
Positive Factors
Consumer Engagement
The company's marketing and third-party delivery initiatives appear to be successfully resonating with consumers.
Long-term Growth
Improved sales performance in 2025 should lead the company to receive more credit for the compelling long-term growth story.
Sales Performance
The company reported second-quarter same-store sales of 3.5%, exceeding both analyst and Consensus Metrix expectations.
Negative Factors
Cost Pressures
Inflation in key commodities like eggs, bacon, coffee, and avocados has pressured restaurant margins significantly.
EBITDA Outlook
The company's EBITDA outlook was significantly reduced due to cost pressures, leading to a sharp stock pullback.
Margin Impact
Core G&A expenses exceeded estimates, partially offsetting the positive financial performance.

First Watch Restaurant Group (FWRG) vs. SPDR S&P 500 ETF (SPY)

First Watch Restaurant Group Business Overview & Revenue Model

Company DescriptionFirst 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 MoneyFirst Watch Restaurant Group generates revenue primarily through the sale of food and beverages at its company-owned and franchised restaurants. The company capitalizes on its unique operating hours, focusing on daytime dining, which reduces labor and operational costs. Additionally, First Watch benefits from its strong brand presence and customer loyalty, which drive consistent traffic to its locations. The company also engages in strategic partnerships and marketing initiatives to enhance its brand visibility and attract new customers.

First Watch Restaurant Group Earnings Call Summary

Earnings Call Date:Aug 05, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 10, 2025
Earnings Call Sentiment Positive
The earnings call presented a robust performance for First Watch, highlighted by strong revenue growth, successful new openings, and strategic acquisitions. The company achieved record performance during key holidays and saw a positive shift in customer demographics. However, challenges remain with commodity cost inflation and increased labor expenses. Despite these challenges, the positive aspects, including an improved EBITDA outlook, outweigh the negatives.
Q2-2025 Updates
Positive Updates
Strong Revenue Growth
Total revenue increased by more than 19%, driven by high-performing new restaurant openings and strategic acquisitions. Same-restaurant sales growth was 3.5%, with 2% positive same-restaurant traffic growth.
Successful New Openings and Acquisitions
17 new system-wide restaurants were opened across 8 states, with a successful acquisition and integration of 19 franchise restaurants in North Carolina, South Carolina, and Missouri.
Record Mother's Day Performance
Mother's Day was the single busiest day in First Watch's 42-year history, with record same-restaurant traffic and sales.
Positive Customer Demographic Shift
The customer base is skewing more towards Gen Z and millennials, with the majority of customers falling below 50 years old.
Improved EBITDA Outlook
Adjusted EBITDA guidance was increased to $119 million to $123 million, driven by reduced egg costs and positive same-restaurant traffic trends.
Negative Updates
Commodity Cost Challenges
Food and beverage expense increased due to commodity inflation of 8.1%, particularly in eggs, bacon, coffee, and avocados.
Slight Increase in Labor Costs
Labor and other related expenses increased to 33.2% of sales, with restaurant level labor inflation at 3.9%.
Modest Negative In-restaurant Traffic
In-restaurant traffic for the quarter was slightly negative, though it improved compared to the previous six quarters.
Company Guidance
During the Second Quarter Earnings Conference Call on August 5, 2025, First Watch Restaurant Group provided robust guidance for the remainder of 2025. The company reported a 19.1% increase in total revenue, reaching $307.9 million, driven by strong new restaurant openings and strategic acquisitions, resulting in a positive same-restaurant sales growth of 3.5%. The company opened 17 new system-wide restaurants in eight states and completed the acquisition of 19 franchise restaurants across North Carolina, South Carolina, and Missouri. First Watch's adjusted EBITDA guidance was raised to a range of $119 million to $123 million, due to improved egg costs and strategic pricing adjustments, with a targeted same-restaurant traffic growth projection remaining flat to slightly positive. Additionally, the company plans to open 62 to 67 new locations system-wide by the end of the year, maintaining its position as a leader in the daytime dining segment.

First Watch Restaurant Group Financial Statement Overview

Summary
First Watch Restaurant Group shows a positive growth trajectory with increasing revenues and improving profitability metrics. However, high debt levels and negative free cash flow highlight potential risks. The company should focus on enhancing profit margins and managing debt effectively to sustain its growth and financial health.
Income Statement
72
Positive
First Watch Restaurant Group has demonstrated consistent revenue growth, with a notable increase in total revenue over the past years. The gross profit margin has shown improvement, indicating efficient cost management. However, the net profit margin remains relatively low, suggesting room for improvement in cost control or pricing strategies. The EBIT and EBITDA margins indicate moderate operational efficiency, but there's potential for further enhancement.
Balance Sheet
65
Positive
The company's debt-to-equity ratio is relatively high, indicating a higher reliance on debt financing, which could pose risks in volatile market conditions. Return on equity has improved, reflecting better utilization of equity for generating profits. The equity ratio suggests a decent level of equity financing, contributing to financial stability, but the high debt levels may still be a concern.
Cash Flow
68
Positive
First Watch Restaurant Group shows a positive trend in operating cash flow, which is commendable. However, the company has experienced negative free cash flow, primarily due to significant capital expenditures. The operating cash flow to net income ratio is strong, indicating good cash conversion efficiency, but the negative free cash flow to net income ratio suggests challenges in converting earnings into free cash.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.06B1.02B891.55M730.16M601.19M342.39M
Gross Profit363.07M792.81M190.12M139.53M127.55M29.88M
EBITDA85.58M98.38M85.36M54.73M59.71M-4.29M
Net Income12.23M18.93M25.39M6.91M-2.11M-49.68M
Balance Sheet
Total Assets1.54B1.51B1.27B1.10B1.05B1.01B
Cash, Cash Equivalents and Short-Term Investments18.61M33.31M49.63M49.67M51.86M38.85M
Total Debt645.70M809.55M606.97M507.35M473.97M637.90M
Total Liabilities947.85M918.97M705.76M581.31M542.49M686.65M
Stockholders Equity596.29M595.39M561.28M523.13M504.43M320.87M
Cash Flow
Free Cash Flow-25.19M-12.28M10.65M-393.00K27.29M-45.34M
Operating Cash Flow110.83M115.67M95.34M62.94M62.97M-18.36M
Investing Cash Flow-211.26M-206.65M-123.37M-63.11M-35.68M-26.97M
Financing Cash Flow75.53M74.33M28.07M-2.02M-14.27M73.31M

First Watch Restaurant Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price18.59
Price Trends
50DMA
17.59
Positive
100DMA
17.20
Positive
200DMA
18.06
Positive
Market Momentum
MACD
0.37
Negative
RSI
57.47
Neutral
STOCH
58.69
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 18.59 is above the 20-day moving average (MA) of 18.17, above the 50-day MA of 17.59, and above the 200-day MA of 18.06, indicating a bullish trend. The MACD of 0.37 indicates Negative momentum. The RSI at 57.47 is Neutral, neither overbought nor oversold. The STOCH value of 58.69 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 56 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

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
68
Neutral
$3.04B18.8041.01%1.78%4.77%38.24%
67
Neutral
$1.14B284.250.69%14.53%-83.26%
67
Neutral
$508.60M14.937.36%3.62%17.67%
64
Neutral
$750.01M28.237.12%4.07%-1.24%
64
Neutral
$1.16B20.9912.90%1.89%2.84%-4.44%
61
Neutral
$17.97B12.87-5.29%2.97%1.26%-14.45%
46
Neutral
$103.74M36.29-5.04%0.96%10.67%-181.88%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FWRG
First Watch Restaurant Group
18.59
2.78
17.58%
BJRI
BJ's Restaurants
33.56
4.46
15.33%
CBRL
Cracker Barrel
52.81
17.45
49.35%
CAKE
Cheesecake Factory
60.63
24.88
69.59%
PTLO
Portillo's
6.82
-5.29
-43.68%
GENK
GEN Restaurant Group, Inc. Class A
3.11
-4.62
-59.77%

First Watch Restaurant Group Corporate Events

Private Placements and FinancingRegulatory Filings and Compliance
First Watch Completes Share Sale Agreement with Barclays
Neutral
Aug 8, 2025

On August 6, 2025, First Watch Restaurant Group, Inc. entered into an underwriting agreement with Barclays Capital Inc. and Goldman Sachs & Co. LLC for the sale of 5,000,000 shares by selling shareholders at $17.70 per share, which closed on August 8, 2025. The company did not sell any shares or receive proceeds from this offering, which was conducted under a prospectus supplement to a registration statement filed with the SEC.

Business Operations and StrategyFinancial Disclosures
First Watch Reports Q2 Revenue Growth and Expansion
Positive
Aug 5, 2025

First Watch Restaurant Group reported a 19.1% increase in total revenues for Q2 2025, reaching $307.9 million, and opened 17 new restaurants, marking its 600th location milestone. Despite a decrease in net income and adjusted EBITDA compared to the previous year, the company raised its annual EBITDA guidance, anticipating stronger profitability in the latter half of 2025, supported by positive same-restaurant sales and traffic growth.

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.Date of analysis: Aug 22, 2025