Critical Review: First Watch Restaurant Group (NASDAQ:FWRG) & Texas Roadhouse (NASDAQ:TXRH)

First Watch Restaurant Group (NASDAQ:FWRG – Get Rating) and Texas Roadhouse (NASDAQ:TXRH – Get Rating) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, risk, earnings, profitability, valuation, dividends and institutional ownership.

Risk & Volatility

First Watch Restaurant Group has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, Texas Roadhouse has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Watch Restaurant Group	0.95%	1.33%	0.64%
Texas Roadhouse	6.72%	26.92%	11.18%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Watch Restaurant Group	$730.16 million	1.24	-$2.11 million	$0.12	127.34
Texas Roadhouse	$4.01 billion	1.70	$269.82 million	$3.97	25.59

Texas Roadhouse has higher revenue and earnings than First Watch Restaurant Group. Texas Roadhouse 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 target prices for First Watch Restaurant Group and Texas Roadhouse, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Watch Restaurant Group	0	3	5	0	2.63
Texas Roadhouse	0	8	7	0	2.47

First Watch Restaurant Group presently has a consensus price target of $20.11, indicating a potential upside of 31.62%. Texas Roadhouse has a consensus price target of $105.83, indicating a potential upside of 4.16%. Given First Watch Restaurant Group’s stronger consensus rating and higher probable upside, equities analysts plainly believe First Watch Restaurant Group is more favorable than Texas Roadhouse.

Institutional and Insider Ownership

96.4% of First Watch Restaurant Group shares are held by institutional investors. Comparatively, 97.5% of Texas Roadhouse shares are held by institutional investors. 4.1% of First Watch Restaurant Group shares are held by company insiders. Comparatively, 5.0% of Texas Roadhouse shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Texas Roadhouse beats First Watch Restaurant Group on 10 of the 14 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 Texas Roadhouse

(Get Rating)

Texas Roadhouse, Inc. is a full-service, casual dining restaurant chain, which offers assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. It operates restaurants under the Texas Roadhouse and Aspen Creek names. The firm also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches. It also provides supervisory and administrative services for other license and franchise restaurants. The company was founded by W. Kent Taylor on February 17, 1993 and is headquartered in Louisville, KY.