Critical Review: First Watch Restaurant Group (NASDAQ:FWRG) versus TH International (NASDAQ:THCH)

TH International (NASDAQ:THCH) and First Watch Restaurant Group (NASDAQ:FWRG) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Analyst Ratings

This is a summary of recent ratings for TH International and First Watch Restaurant Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TH International	0	0	0	0	0.00
First Watch Restaurant Group	0	2	7	1	2.90

First Watch Restaurant Group has a consensus target price of $23.30, suggesting a potential upside of 17.38%. Given First Watch Restaurant Group’s stronger consensus rating and higher possible upside, analysts plainly believe First Watch Restaurant Group is more favorable than TH International.

Insider and Institutional Ownership

91.8% of TH International shares are owned by institutional investors. Comparatively, 96.1% of First Watch Restaurant Group shares are owned by institutional investors. 5.0% of First Watch Restaurant Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares TH International and First Watch Restaurant Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TH International	$1.45 billion	0.07	-$123.81 million	($2.55)	-1.17
First Watch Restaurant Group	$997.25 million	1.21	$25.39 million	$0.33	60.15

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TH International	-40.57%	N/A	-16.23%
First Watch Restaurant Group	2.09%	3.61%	1.53%

Risk and Volatility

TH International has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, First Watch Restaurant Group has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500.

Summary

First Watch Restaurant Group beats TH International on 14 of the 15 factors compared between the two stocks.

About TH International

TH International Limited operates Tim Hortons coffee shops in mainland China, Hong Kong, and Macau. The company offers brewed tea, coffee, milk tea, lemonade, hot chocolate, and coffee drinks. It is also involved in franchise related business. The company is based in Shanghai, the People's Republic of China.

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.