TLDR:
- Sweetgreen’s stock rose 1.6% to $34.85, outperforming the broader market
- The company’s revenue is projected to grow 14.01% year-over-year
- Sweetgreen shares have gained 25% in the last month and 209% in the last year
- Analysts forecast 17% annual revenue growth for Sweetgreen over the next 3 years
- The stock is trading at a high price-to-sales ratio of 6.1x compared to industry peers
Sweetgreen, the fast-casual salad chain, has seen its stock price surge in recent weeks as investors react to strong growth projections for the company.
The stock closed at $36.24 on Tuesday, up 4% for the day and continuing a broader upward trend that has seen shares gain 25% in the last month alone.
This recent jump adds to an impressive run for Sweetgreen stock over the past year, with shares up 209% compared to 12 months ago. The gains come as analysts project continued robust growth for the company in both the near and long-term.
For the upcoming quarter, Sweetgreen is expected to report revenue of $174.92 million, which would represent a 14.01% increase compared to the same period last year. The company’s earnings per share are forecast to improve as well, with projections of -$0.16 per share marking a 27.27% improvement year-over-year.
Looking further ahead, the outlook appears even brighter. Analysts are forecasting 17% annual revenue growth for Sweetgreen over the next three years, outpacing the broader restaurant industry’s projected growth rate of 12% per year. This optimistic outlook has helped drive Sweetgreen’s price-to-sales ratio to 6.1x, well above the industry average of 1.5x.
The company’s strong performance comes as it continues to expand its footprint of restaurants serving healthy, customizable salads and grain bowls. Sweetgreen has found success catering to health-conscious consumers looking for quick, nutritious meal options.
While the stock’s valuation metrics are high compared to industry peers, many investors appear to be betting that Sweetgreen’s growth trajectory justifies the premium. The company’s revenue jumped 21% year-over-year in its most recent quarter to reach $184.6 million.
Sweetgreen has also been investing in technology to improve its operations and customer experience. The company’s mobile app and online ordering platforms have proven popular with customers looking for convenient ways to place orders.
Despite the overall bullish sentiment, some analysts urge caution given Sweetgreen’s lofty valuation and the inherent risks in the competitive restaurant industry. Of 11 analysts covering the stock, 3 rate it a Hold while 8 rate it a Buy. The average price target stands at $38.20, suggesting limited near-term upside from current levels.
Insiders have been active traders of Sweetgreen stock in recent months as well. CEO Jonathan Neman sold nearly 170,000 shares in late August for total proceeds of over $6 million. Other executives and directors have also been sellers of the stock as it has climbed higher.
Institutional investors have been increasing their stakes in Sweetgreen, with several large money managers adding to positions or initiating new ones in recent months. This includes Baillie Gifford & Co., which raised its stake by 6.2% in the second quarter to over 12.3 million shares.
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