Last week, you might have seen that First Watch Restaurant Group, Inc. (NASDAQ:FWRG) released its yearly result to the market. The early response was not positive, with shares down 2.3% to US$24.79 in the past week. Results were roughly in line with estimates, with revenues of US$892m and statutory earnings per share of US$0.41. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the eight analysts covering First Watch Restaurant Group are now predicting revenues of US$1.05b in 2024. If met, this would reflect a solid 18% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 10% to US$0.47. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.03b and earnings per share (EPS) of US$0.46 in 2024. So the consensus seems to have become somewhat more optimistic on First Watch Restaurant Group's earnings potential following these results.
The consensus price target rose 18% to US$27.89, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic First Watch Restaurant Group analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$22.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await First Watch Restaurant Group shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of First Watch Restaurant Group'shistorical trends, as the 18% annualised revenue growth to the end of 2024 is roughly in line with the 20% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.5% per year. So although First Watch Restaurant Group is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around First Watch Restaurant Group's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple First Watch Restaurant Group analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for First Watch Restaurant Group that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.