First watch restaurant group sees $158m in stock sales by Advent International

Advent International, a significant stakeholder in First Watch Restaurant Group (LON:), Inc. (NASDAQ:FWRG), has sold 8 million shares of the company’s common stock. The transactions, completed on November 13, 2024, were executed at a price of $19.76 per share, amounting to a total value of approximately $158 million.

The shares were sold through a public offering, as detailed in a prospectus supplement dated November 12, 2024. Following these sales, Advent International continues to hold 19,189,784 shares of First Watch Restaurant Group, maintaining its position as a major shareholder.

The sale involved multiple entities under Advent International, including Advent International GPE VIII Limited Partnership and Advent International GPE VIII-B Limited Partnership, among others. Despite the significant sale, Advent International retains a substantial stake in the company, indicating its ongoing investment interest in First Watch Restaurant Group.

In other recent news, First Watch Restaurant Group has announced an underwritten secondary stock offering at $19.95 per share, involving 8 million shares sold by funds managed by Advent International, L.P. The company itself will not receive any proceeds from this sale. Goldman Sachs & Co. LLC, the underwriter, reserves the option to purchase up to an additional 1.2 million shares within 30 days at the public offering price.

Recent financial results reveal a blend of growth and challenges for First Watch. The company reported system-wide sales of $291.8 million and total revenues of $251.6 million, a 14.8% increase year-over-year, despite a 4.4% dip in same-restaurant traffic. The opening of 44 new restaurants over the year has contributed to this revenue growth.

Piper Sandler, an analyst firm, has shown confidence in First Watch by increasing the price target to $23.00 from $22.00, while maintaining an Overweight rating for the stock. They anticipate that traffic trends will likely continue to be negative in the fourth quarter of 2024.

In terms of future expectations, First Watch plans to continue its expansion, with 23 new locations expected to open in the fourth quarter. The company has adjusted its 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance, raising the lower end of the forecast range, attributed to the effective management of restaurant-level margins amidst a challenging same-store sales landscape.

InvestingPro Insights

Following Advent International’s significant share sale, First Watch Restaurant Group’s (NASDAQ:FWRG) financial metrics and market performance offer additional context for investors. According to InvestingPro data, FWRG has a market capitalization of $1.15 billion, with a P/E ratio of 63.63, suggesting a high earnings multiple relative to its peers.

The company has demonstrated strong revenue growth, with a 19.77% increase over the last twelve months as of Q3 2024, reaching $997.25 million. This growth is complemented by an impressive EBITDA growth of 26.19% over the same period, indicating improved operational efficiency.

Despite these positive indicators, InvestingPro Tips highlight some potential concerns. The company operates with a significant debt burden, and short-term obligations exceed liquid assets. Additionally, four analysts have revised their earnings downwards for the upcoming period, which may signal some caution about near-term performance.

Interestingly, while the stock has taken a big hit over the last week with a -13.53% return, it has shown strong performance over the last month with a 21.71% return. This volatility aligns with the recent large-scale share sale by Advent International and may present both risks and opportunities for investors.

For those seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for FWRG, providing deeper insights into the company’s financial health and market position.

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