BOSTON—Advent International, L.P. and its associated entities have sold a significant portion of their holdings in First Watch Restaurant Group (LON:), Inc. (NASDAQ:FWRG), according to a recent filing. On November 13, the firm sold 8 million shares of First Watch common stock at a price of $19.76 per share, totaling approximately $158 million.
This transaction was part of a public offering, as detailed in the prospectus supplement dated November 12, 2024. Following the sale, Advent International continues to hold approximately 19.2 million shares of First Watch common stock. The sale involved multiple entities under Advent International, including Advent International GPE VIII-B Limited Partnership and Advent Partners GPE VIII Limited Partnership, among others.
In other recent news, First Watch Restaurant Group announced an underwritten secondary stock offering priced at $19.95 per share, involving 8 million shares managed by Advent International. The company will not receive any proceeds from this sale. Goldman Sachs & Co. LLC, the underwriter, has an option to purchase an additional 1.2 million shares within 30 days. The offering is part of the company’s growth strategy and follows recent recognition in the restaurant industry.
First Watch also reported its third quarter 2024 financial results, indicating both growth and challenges. System-wide sales reached $291.8 million and total revenues were $251.6 million, marking a 14.8% increase from the previous year. Despite a 4.4% dip in same-restaurant traffic, the addition of 44 new restaurants contributed to this revenue growth.
Piper Sandler showed confidence in First Watch by increasing the price target to $23.00 from $22.00, maintaining an Overweight rating for the stock. However, the firm anticipates negative traffic trends into the fourth quarter of 2024 and the first half of 2025. The company plans to continue its expansion, with 23 new locations expected to open in the fourth quarter. These are the recent developments in First Watch Restaurant Group.
InvestingPro Insights
Following Advent International’s significant sale of First Watch Restaurant Group (NASDAQ:FWRG) shares, it’s crucial to examine the company’s current financial position and market performance. According to InvestingPro data, First Watch has a market capitalization of $1.15 billion, reflecting its position in the restaurant industry.
The company’s revenue growth is noteworthy, with a 19.77% increase over the last twelve months as of Q3 2024, reaching $997.25 million. This growth trend is supported by a strong EBITDA growth of 26.19% over the same period. These figures suggest that First Watch is experiencing solid operational expansion despite the recent large share sale by a major investor.
However, investors should be aware of some potential challenges. InvestingPro Tips highlight that First Watch operates with a significant debt burden and that short-term obligations exceed liquid assets. This financial structure could pose risks in a changing economic environment or if growth were to slow.
The stock’s valuation metrics present a mixed picture. With a P/E ratio of 63.63, First Watch is trading at a high earnings multiple, which InvestingPro Tips flag as a point of caution. This high valuation suggests that investors are pricing in substantial future growth expectations.
It’s worth noting that while the stock has taken a hit over the last week, with a -13.53% return, it has shown strong performance over the past month, boasting a 21.71% return. This volatility may be partly attributed to the recent share sale and market reactions to changing investor positions.
For those interested in a deeper analysis, InvestingPro offers additional insights with 5 more tips available for First Watch Restaurant Group. These extra tips could provide valuable context for understanding the company’s prospects in light of recent events.
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