Sweetgreen Inc. (SG) is a fast-casual chain that serves simple, healthy salads and food bowls made from scratch using locally sourced ingredients. Besides salads, it also serves frozen yogurts, drinks, plates, nutritional specialties, and desserts. Through its online stores, the company also offers a range of merchandise such as shirts, gift cards, bottles, and reusable shopping bags.
Headquartered in Washington, D.C., the company operates across the United States with more than 220 stores nationwide, and carries a market cap of $3.57 billion.
Sweetgreen stock has been on a historic run this year, gaining 179% YTD. During the month of May alone, the stock soared 36.8% after its well-received Q1 results.
SG Stock Surges After Earnings
Sweetgreen’s Q1 earnings triggered its May bull gap, after the company posted revenue of $157.9 million, beating estimates of $152 million. Same-store sales were up 5% - though the quarterly loss of $0.23 per share was slightly wider than expected, even as gross margin increased to 18.1% from 13.5% last year.
However, investors overlooked the bottom-line miss, thanks to Sweetgreen's robust top-line performance.
Following the 26% revenue growth reported in Q1, management upwardly revised its full-year outlook, with 2024 revenue now anticipated between $660 million to $675 million. Same-store sales guidance was hiked to a range between 4-6%, with profit margin projected between 18.5%-20%.
At the midpoint, Sweetgreen's revenue guidance of $667.5 million matched Wall Street's expectations.
Here's What Analysts Make of Sweetgreen After Earnings
The fast-casual restaurant chain won some accolades from Wall Street after its Q1 report, with JPMorgan (JPM) raising its price target from $28 to $30 while maintaining an “Overweight” rating on the stock.
In a note to clients, analyst Rahul Krotthapalli called out "confidence in the momentum the brand has been building since late last year, and the 1Q24 beat + F24 raise reaffirms this standing as the company steadily rebuilds credibility after a tough post-COVID/post-IPO period.”
TD Cowen has a “Hold” rating on SG stock, but noted, “We continue to have confidence in 2024 restaurant level margin nearing the high end of guidance.”
Overall, Sweetgreen has a “Moderate Buy” rating from the 10 analysts in coverage, with 6 “Strong Buys,” 1 “Moderate Buy,” 2 “Holds,” and 1 “Strong Sell.”
SG stock trades very close to its mean price target of $32.78. However, the stock's Street-high price target of $45, courtesy of RBC Capital, suggests upside potential of more than 42% from Friday's close.
On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
