Reviewing First Watch Restaurant Group (NASDAQ:FWRG) and Potbelly (NASDAQ:PBPB)

First Watch Restaurant Group (NASDAQ:FWRGGet Rating) and Potbelly (NASDAQ:PBPBGet Rating) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Profitability

This table compares First Watch Restaurant Group and Potbelly’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Watch Restaurant Group 0.51% 0.75% 0.33%
Potbelly -3.05% -938.53% -2.42%

Institutional and Insider Ownership

95.5% of First Watch Restaurant Group shares are owned by institutional investors. Comparatively, 54.9% of Potbelly shares are owned by institutional investors. 4.1% of First Watch Restaurant Group shares are owned by insiders. Comparatively, 4.8% of Potbelly shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares First Watch Restaurant Group and Potbelly’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Watch Restaurant Group $601.19 million 1.43 -$2.11 million $0.07 207.60
Potbelly $380.05 million 0.38 -$23.78 million ($0.45) -10.98

First Watch Restaurant Group has higher revenue and earnings than Potbelly. Potbelly is trading at a lower price-to-earnings ratio than First Watch Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for First Watch Restaurant Group and Potbelly, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Watch Restaurant Group 0 2 9 0 2.82
Potbelly 0 1 0 0 2.00

First Watch Restaurant Group currently has a consensus price target of $22.68, indicating a potential upside of 56.10%. Given First Watch Restaurant Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe First Watch Restaurant Group is more favorable than Potbelly.

Summary

First Watch Restaurant Group beats Potbelly on 12 of the 13 factors compared between the two stocks.

About First Watch Restaurant Group

(Get Rating)

First Watch Restaurant Group, Inc. operates and franchises restaurants under the First Watch trade name. As of September 7, 2022, it operated 445 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.

About Potbelly

(Get Rating)

Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly sandwich shops. As of December 26, 2021, it had 443 shops in 33 states and the District of Columbia, which included 397 shops and 46 franchisees operated shops. The company was formerly known as Potbelly Sandwich Works, Inc. and changed its name to Potbelly Corporation in 2002. Potbelly Corporation was founded in 1977 and is headquartered in Chicago, Illinois.

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