First Watch Restaurant Group (NASDAQ:FWRG) Announces Earnings Results

Key Points

• First Watch exceeded quarterly expectations: EPS was $0.08 versus the $0.03 consensus, while revenue reached $349.9 million, up 10.7% year over year. Adjusted EBITDA increased 17% to $39.7 million, although same-restaurant traffic declined 1.9%.
• Management raised its outlook for full-year adjusted EBITDA to approximately $136 million and expects revenue growth of about 13.5%. The company opened 16 restaurants during the quarter and remains focused on continued expansion.
• Shares opened 5.4% higher at $13.65 following the results. Analysts maintain an overall “Buy” consensus with an average price target of $17.90, despite several recent target-price reductions.

First Watch Restaurant Group (NASDAQ:FWRG - Get Free Report) released its earnings results on Tuesday. The company reported $0.08 EPS for the quarter, topping analysts' consensus estimates of $0.03 by $0.05, Zacks reports. The firm had revenue of $349.86 million during the quarter, compared to analyst estimates of $348.99 million. First Watch Restaurant Group had a net margin of 1.35% and a return on equity of 2.85%. The business's quarterly revenue was up 10.7% compared to the same quarter last year. During the same quarter in the previous year, the business earned $0.05 EPS.

Here are the key takeaways from First Watch Restaurant Group's conference call:

• Third-quarter revenue increased 10.7% to $349.9 million, supported by 1.0% same-restaurant sales growth and contributions from 147 non-comparable restaurants. Same-restaurant traffic declined 1.9%, but the company highlighted an 8.1% two-year sales increase and 0.8% two-year traffic increase.
• Adjusted EBITDA rose 17% to $39.7 million, with margin expanding to 11.4% from 10.8% a year ago. G&A leverage improved by 60 basis points, although restaurant-level operating margin declined 30 basis points to 19.4% due to higher food and controllable costs.
• Management raised its full-year outlook for Adjusted EBITDA to approximately $136 million, at the high end of its previous range, and now expects revenue growth of about 13.5%. Full-year commodity inflation is expected to be roughly flat, while capital expenditures were reduced to approximately $145 million.
• First Watch opened 16 restaurants in the quarter and 53 year to date, and remains on track for approximately 60 net new systemwide restaurants in 2026 and 55 openings in 2027. Recent restaurant classes are exceeding sales and return targets, supporting continued confidence in the brand’s expansion opportunity.
• Management plans to preserve flexibility around unit growth beyond 2027 because of higher interest rates and floating-rate borrowing exposure, while raising its long-term Adjusted EBITDA growth target through 2028 to more than 15%. The company is also testing TikTok GO and local linear television to broaden awareness and generate traffic, but these initiatives remain early-stage.

First Watch Restaurant Group Trading Up 5.4%

Shares of NASDAQ FWRG opened at $13.65 on Tuesday. The company's fifty day moving average is $11.37 and its 200-day moving average is $12.45. The stock has a market cap of $842.68 million, a price-to-earnings ratio of 47.04, a P/E/G ratio of 52.17 and a beta of 1.05. First Watch Restaurant Group has a twelve month low of $9.88 and a twelve month high of $18.77. The company has a quick ratio of 0.22, a current ratio of 0.27 and a debt-to-equity ratio of 0.44.

Wall Street Analysts Forecast Growth

A number of equities research analysts recently commented on FWRG shares. Weiss Ratings raised First Watch Restaurant Group from a "sell (d+)" rating to a "hold (c-)" rating in a research note on Thursday. Stephens dropped their price objective on First Watch Restaurant Group from $21.00 to $18.00 and set an "overweight" rating for the company in a report on Thursday, October 15th. Citigroup cut their target price on First Watch Restaurant Group from $20.00 to $19.00 and set a "buy" rating on the stock in a research note on Wednesday, October 21st. Raymond James Financial reduced their target price on First Watch Restaurant Group from $20.00 to $18.00 and set a "strong-buy" rating on the stock in a report on Friday, October 16th. Finally, DA Davidson decreased their target price on First Watch Restaurant Group from $17.00 to $15.00 and set a "buy" rating for the company in a research report on Friday, October 2nd. Two investment analysts have rated the stock with a Strong Buy rating, eight have assigned a Buy rating and two have issued a Hold rating to the stock. According to MarketBeat, the stock currently has an average rating of "Buy" and an average target price of $17.90.

First Watch Restaurant Group Company Profile

First Watch Restaurant Group, Inc operates a daytime-focused restaurant concept serving breakfast, brunch and lunch. Its restaurants offer made-to-order meals such as omelets, pancakes, French toast, sandwiches, salads and bowls, along with fresh juices, coffee and other beverages. The company generally does not serve dinner, positioning its restaurants around the daytime dining occasion.

First Watch restaurants emphasize fresh preparation and seasonal menu offerings, including items made with eggs, fruits, vegetables and other ingredients prepared in the restaurant.

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