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First Watch Restaurant Group (FWRG)
NASDAQ:FWRG
US Market

First Watch Restaurant Group (FWRG) AI Stock Analysis

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First Watch Restaurant Group

(NASDAQ:FWRG)

Rating:69Neutral
Price Target:
$19.00
▲(8.20%Upside)
First Watch Restaurant Group demonstrates strong revenue growth and strategic expansion, but faces challenges with high valuation, margin pressures, and high debt levels. The technical indicators show positive momentum, and recent corporate events bolster confidence. Overall, the stock presents growth potential tempered by financial and valuation concerns.
Positive Factors
Customer Traffic
Dine-in traffic improved, indicating potential positive trends in customer visits.
Sales Performance
Improved sales performance should lead the company to receive more credit for the compelling long-term growth story.
Negative Factors
Cost Pressures
The company's EBITDA outlook was significantly reduced due to cost pressures, leading to a sharp stock pullback.
Margin Pressure
The company faces continuing margin pressure from high commodity costs and tariff-related cost pressures.

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:May 06, 2025
(Q1-2025)
|
% Change Since: -5.64%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
First Watch reported strong revenue growth and successful new store openings, with improved traffic trends driven by strategic marketing and operational efficiency. However, significant margin pressure from higher commodity and labor costs, along with a decline in adjusted EBITDA, offset these positive trends. Despite challenges, the company remains optimistic about its growth strategies and market position.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
First Watch achieved a 16.4% increase in total revenue, driven by positive same-restaurant sales growth of 0.7% and the contribution of 115 non-comp restaurants.
New Restaurant Openings
13 new system-wide restaurant openings, including the first New England location in Hanover, Massachusetts, which is performing above expectations.
Traffic Improvement
Sequential improvement in same-restaurant traffic, with a return to positive traffic in March and the best monthly same-restaurant traffic result in over two years in April.
Successful Marketing Campaigns
Enhanced strategic marketing efforts led to improved traffic trends and promising results in targeted geographies.
Franchise Acquisitions
Completion of franchise acquisitions of 16 restaurants in North and South Carolina and three in Missouri, bolstering presence in key states.
Operational Efficiency
Improved ticket times and reduced employee turnover for the eighth consecutive quarter, demonstrating operational efficiency and strong team development.
Negative Updates
Margin Pressure
Restaurant-level operating profit margin decreased to 16.5% from 20.8% last year due to higher commodity inflation and labor costs.
Cost Inflation
Commodity inflation of 7.7% and increased food and beverage costs at 23.8% of sales impacted margins, driven by high prices of eggs, bacon, coffee, and avocados.
Adjusted EBITDA Decline
Adjusted EBITDA was $22.8 million, $5.8 million below last year, with adjusted EBITDA margin slipping to 8.1% from 11.8%.
Lower In-Restaurant Traffic
First quarter in-restaurant traffic was below expectations, despite improvements in third-party delivery traffic.
Higher Health Benefit Costs
Labor and other related expenses increased by 130 basis points due to higher health benefit costs resulting from higher enrollment and claims.
Company Guidance
During the First Watch Restaurant Group Inc.'s first quarter earnings call for fiscal year 2025, management provided guidance reflecting both challenges and opportunities. The company reported over 16% total revenue growth year-over-year, driven by positive same-restaurant sales and 13 new restaurant openings. Despite this strong top-line performance, adjusted EBITDA was revised down to a range of $114 million to $119 million due to increased costs, including a significant 7.7% commodity inflation and higher health benefit expenses. These pressures were further compounded by a strategic decision to enhance customer value through initiatives like doubling meat portions in popular dishes without increasing prices. First Watch aims to maintain low-single-digit same-restaurant sales growth and positive traffic, with a focus on expanding marketing efforts and optimizing third-party delivery partnerships. The company remains committed to long-term growth, targeting 59 to 64 net new restaurant openings and leveraging its enhanced marketing strategies to drive brand awareness and customer engagement.

First Watch Restaurant Group Financial Statement Overview

Summary
First Watch Restaurant Group demonstrates consistent revenue growth and improving profitability metrics. However, high debt levels and negative free cash flow present potential risks and highlight the need for better cost management and debt handling.
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 Price17.56
Price Trends
50DMA
16.54
Positive
100DMA
17.55
Positive
200DMA
17.73
Negative
Market Momentum
MACD
0.13
Negative
RSI
62.48
Neutral
STOCH
83.96
Negative
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 17.56 is above the 20-day moving average (MA) of 15.77, above the 50-day MA of 16.54, and below the 200-day MA of 17.73, indicating a neutral trend. The MACD of 0.13 indicates Negative momentum. The RSI at 62.48 is Neutral, neither overbought nor oversold. The STOCH value of 83.96 is Negative, 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
74
Outperform
$3.23B20.4946.60%1.65%4.42%48.23%
74
Outperform
$899.28M28.347.37%4.57%6.89%
71
Outperform
$1.51B26.3712.90%1.47%2.84%-4.44%
70
Neutral
$1.03B49.826.01%2.91%-4.86%
69
Neutral
$1.07B100.801.86%14.43%-53.71%
61
Neutral
AU$2.85B25.945.01%5.14%2.63%-29.95%
59
Neutral
$126.61M36.29-1.62%0.78%14.40%-114.79%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FWRG
First Watch Restaurant Group
17.56
1.75
11.07%
BJRI
BJ's Restaurants
46.78
10.45
28.76%
CBRL
Cracker Barrel
67.93
29.39
76.26%
CAKE
Cheesecake Factory
65.27
28.61
78.04%
PTLO
Portillo's
12.25
2.76
29.08%
GENK
GEN Restaurant Group, Inc. Class A
3.86
-4.57
-54.21%

First Watch Restaurant Group Corporate Events

Executive/Board ChangesShareholder Meetings
First Watch Holds Annual Stockholders Meeting
Positive
May 21, 2025

On May 21, 2025, First Watch Restaurant Group held its Annual Meeting of Stockholders, where stockholders elected Class I directors and ratified PricewaterhouseCoopers LLP as the independent accounting firm for the fiscal year ending December 28, 2025. These decisions are expected to impact the company’s governance and financial oversight positively, ensuring continuity and stability in its operations.

The most recent analyst rating on (FWRG) stock is a Buy with a $26.00 price target. To see the full list of analyst forecasts on First Watch Restaurant Group stock, see the FWRG Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
First Watch Reports Q1 2025 Revenue Growth
Positive
May 6, 2025

First Watch Restaurant Group reported a 16.4% increase in total revenues for Q1 2025, despite a net loss of $0.8 million. The company opened 13 new restaurants across 10 states, bringing the total to 584 system-wide locations. Same-restaurant sales grew by 0.7%, although traffic slightly declined by 0.7%. The company updated its fiscal year 2025 guidance, projecting adjusted EBITDA between $114 million and $119 million, with plans to open 59 to 64 new restaurants. Despite macroeconomic uncertainties, First Watch remains optimistic about its growth and development pipeline.

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: Jul 02, 2025