First Watch Restaurant Group Inc. Common Stock (FWRG)

FairStock Score: 41/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I approach a restaurant chain with Graham's skepticism: sales growth without cash and earnings is not worth much. First Watch operates and franchises breakfast and lunch restaurants in the U.S. In fiscal 2025, the year ended 2025-12-28, filed revenue was $1.2B, net income $19.4M, and diluted EPS $0.31. That was up from fiscal 2024, the year ended 2024-12-29, when revenue was $1.0B and net income $18.9M, but below fiscal 2023, the year ended 2023-12-31, when net income was $25.4M on $891.6M of revenue. The latest filed quarter, fiscal Q2 2026, the quarter ended 2026-06-28, showed revenue of $354.7M, net income of $2.3M, and diluted EPS of $0.04; the prior quarter, fiscal Q1 2026, the quarter ended 2026-03-29, had a net loss of $2.7M. So growth is real, but profitability is wafer-thin. Quality and financial health concern me. The FairStock return metrics are weak: ROE 2.88%, ROCE 1.18%, and trailing free cash flow is -$21.8M, a -2.9% FCF yield. Debt-to-equity is 1.69, and the Altman Z-Score of 0.47 signals elevated financial risk. I see no evidence of a wide moat; low returns on capital and thin margins in a competitive restaurant industry argue against one. The FairStock P/E is 43.00 and PEG 3.89 at the 2026-10-13 close of $12.04, while the Graham Number is $8.05, implying the price is about 49.6% above that asset-and-earnings benchmark. A P/B of 1.17 is not demanding, and Piotroski 6/9 is decent, but those do not offset negative cash flow and high leverage. I prefer a wider margin of safety. The Lynch category of FAST GROWER reflects historical three-year profit growth of 41.2% and revenue growth of 18.7% per FairStock's rules, but today's earnings and cash flow do not support a rich multiple. Until margins and free cash flow improve, this looks more speculative than Buffett-style.

In plain English: First Watch runs breakfast and lunch restaurants, both company-owned and franchised, mostly in the United States. Sales have grown, but profits are very thin, the business is not producing spare cash after running and expanding, and it carries meaningful debt. At the recent price, the shares look expensive relative to earnings and what the business owns, even though the brand is growing.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-28) · fiscal Q1 2026 10-Q (period ended 2026-03-29) · fiscal Q3 2025 10-Q (period ended 2025-09-28) · fiscal Q2 2025 10-Q (period ended 2025-06-29) · FY2025 10-K (period ended 2025-12-28) · FY2024 10-K (period ended 2024-12-29) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer