Analyzing Shake Shack (NYSE:SHAK) and First Watch Restaurant Group (NASDAQ:FWRG)

Shake Shack (NYSE:SHAK) and First Watch Restaurant Group (NASDAQ:FWRG) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, profitability, risk, analyst recommendations and dividends.

Earnings & Valuation

This table compares Shake Shack and First Watch Restaurant Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shake Shack	$1.45 billion	3.09	$45.72 million	$1.09	95.87
First Watch Restaurant Group	$1.22 billion	0.65	$19.43 million	$0.31	41.48

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

Risk & Volatility

Shake Shack has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500. Comparatively, First Watch Restaurant Group has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Shake Shack	3.16%	11.08%	3.23%
First Watch Restaurant Group	1.59%	3.20%	1.16%

Institutional & Insider Ownership

86.1% of Shake Shack shares are held by institutional investors. Comparatively, 96.1% of First Watch Restaurant Group shares are held by institutional investors. 8.5% of Shake Shack shares are held by insiders. Comparatively, 6.0% of First Watch Restaurant Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Shake Shack and First Watch Restaurant Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shake Shack	0	14	12	1	2.52
First Watch Restaurant Group	0	2	10	1	2.92

Shake Shack currently has a consensus target price of $119.22, suggesting a potential upside of 14.08%. First Watch Restaurant Group has a consensus target price of $19.58, suggesting a potential upside of 52.28%. Given First Watch Restaurant Group’s stronger consensus rating and higher possible upside, analysts plainly believe First Watch Restaurant Group is more favorable than Shake Shack.

Summary

Shake Shack beats First Watch Restaurant Group on 11 of the 14 factors compared between the two stocks.

About Shake Shack

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.

About First Watch Restaurant Group

First Watch Restaurant Group, Inc., through its subsidiaries, operates and franchises restaurants under the First Watch trade name 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 based in Bradenton, Florida.