Stock Story -
What Happened: Shares of casual salad chain Sweetgreen (NYSE:SG) jumped 44.6% in the morning session after the company reported first-quarter earnings results. Sweetgreen blew past analysts' revenue expectations this quarter as its same-store sales grew 5%, enabling it to raise its full-year revenue guidance. Its gross margin also outperformed Wall Street's estimates. On the other hand, its EPS missed analysts' expectations, but the market cares more about its upbeat outlook. Overall, we think this was a good quarter that should please shareholders.
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What is the market telling us: Sweetgreen's shares are quite volatile and over the last year have had 45 moves greater than 5%. But moves this big are very rare even for Sweetgreen and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 2 months ago, when the stock gained 28.1% on the news that the company reported fourth-quarter results with revenue beating by a small amount, though EPS beat by a more convincing margin. The company continued to record growing success via its digital channel, which now stands at roughly 60% of total revenue. The business is also expanding into new markets after setting up locations in Milwaukee, Tampa, and Rhode Island in 2023. In 2024, the company is expected to add 23 to 27 new restaurants to its tally. As a result, guidance was optimistic, with next quarter's revenue and adjusted EBITDA guidance coming in higher than Wall Street's estimates. Finally, while full-year revenue guidance was in line, adjusted EBITDA was better than Wall Street's estimates. Overall, this was a really good quarter that should please shareholders.
Sweetgreen is up 188% since the beginning of the year. Investors who bought $1,000 worth of Sweetgreen's shares at the IPO in November 2021 would now be looking at an investment worth $643.32.
