Salad chain Sweetgreen revolutionized the fast food industry when it launched in 2007, proving healthy food could be convenient and accessible. That's why it was so exciting to the consumer that there was actually a restaurant concept that offered these type of items on their menu. In 2025, it's still a lunch favorite among office workers in big cities, but looks can be deceiving.The company has been struggling ever since going public in 2021. It has never been profitable, reporting a $90 million net loss i ...

Group 1: Q3 Earnings Overview - The Q3 earnings season has started positively, with 91% of S&P 500 companies reporting results, and analysts expect a 13.1% increase in earnings per share, marking the fourth consecutive quarter of double-digit growth [2][9] - Initial expectations were lower, with analysts predicting a 7.9% increase in earnings per share as of September 30 [3] - Companies have reported more positive earnings surprises (82%) than negative ones (18%), with 77% of companies also reporting positive revenue surprises [9] Group 2: Notable Company Earnings - Instacart reported GAAP earnings per share of $0.51, exceeding estimates of $0.50, with revenue of $939 million, surpassing expectations of $933 million [6] - Constellation Energy's stock fell nearly 6% after reporting GAAP earnings per share of $2.97, missing estimates of $3.05, although revenue of $6.57 billion exceeded expectations [12] - Wendy's reported revenue of $549 million, a 3% decline year-over-year but above estimates of $534 million, with earnings per share of $0.24 beating expectations of $0.20 [16][17] - Block's shares fell 15% after reporting earnings per share of $0.54 on revenue of $6.11 billion, missing estimates of $0.68 per share and $6.31 billion in revenue [23] - Airbnb's stock rose 5% as it reported 133.6 million nights booked, a 9% increase year-over-year, driven by international bookings [32][33] Group 3: Industry Trends and Challenges - The earnings growth rate for Q3 is on track to increase from Q2, driven by tech enthusiasm around artificial intelligence and ongoing tariff concerns [10] - Consumer-facing companies are experiencing pressures from affordability and sentiment, with mentions of government shutdown impacts increasing [11] - Under Armour reported a net loss of $0.04 per share, with revenue declining 4.7% year-over-year, attributed to challenging consumer demand [35][36]

Core Insights - Sweetgreen, Inc. reported worse-than-expected third-quarter financial results, with losses of 31 cents per share, missing the analyst consensus estimate of 18 cents per share [1] - Quarterly sales were $172.400 million, falling short of the analyst consensus estimate of $179.620 million [1] - The company cut its FY2025 sales guidance from a range of $700 million-$715 million to $682 million-$688 million [2] Financial Performance - Sweetgreen's third-quarter losses were significantly higher than anticipated, indicating potential operational challenges [1] - The sales figures for the quarter also reflect a decline in performance compared to market expectations [1] Management Commentary - CEO Jonathan Neman emphasized the company's focus on operational excellence, menu innovation, and disciplined growth despite a challenging macroeconomic environment [3] - Neman expressed confidence in the leadership team and the strategy to achieve sustained, profitable growth [3] Stock Market Reaction - Following the earnings announcement, Sweetgreen shares experienced a decline of 10.8%, trading at $5.57 [3] Analyst Ratings and Price Targets - Piper Sandler analyst Brian Mullan maintained a Neutral rating and lowered the price target from $12 to $9 [6] - Wells Fargo analyst Anthony Trainor maintained an Overweight rating but cut the price target from $13 to $10 [6] - RBC Capital analyst Logan Reich maintained an Outperform rating and reduced the price target from $13 to $7 [6]

Core Insights - The restaurant sector has issued significant warnings regarding a decline in U.S. consumer spending during the Q3 earnings season, with notable companies like Chipotle experiencing a drop in traffic and facing resistance to recent price hikes [1] Industry Summary - The restaurant industry is currently facing challenges due to weaker consumer traffic, which has been highlighted by major players such as Chipotle [1] - There is a notable pushback from consumers against recent price increases, indicating potential issues with pricing strategies in the sector [1]

Core Insights - Sweetgreen intends to sell Spyce to Wonder for $186.4 million, which includes $100 million in cash and $86.4 million in stock [1][4] - Sweetgreen acquired Spyce in 2021 for $70 million, and the technology is currently implemented in 20 locations, representing over 7% of its portfolio [2] - The acquisition allows Sweetgreen to maintain the use of Infinite Kitchen technology across its restaurants with increased flexibility [4] Company Developments - Sweetgreen's CEO, Jonathan Neman, expressed pride in the development and monetization of the robotic food technology [3] - The company initially aimed for full automation in all stores but has since revised its goal to implement the technology in half of its locations [3] - Sweetgreen operates 270 locations across the United States [6] Industry Impact - Wonder's CEO, Marc Lore, highlighted that the acquisition of Spyce's technology will enhance their capabilities, allowing for the operation of over 100 restaurants from a small kitchen [5] - The deal is positioned to transform food preparation and service, emphasizing speed, temperature, and accuracy [5]

Upgrades - Piper Sandler upgraded Expedia (EXPE) to Neutral from Underweight with a price target of $250, increased from $190, following "very strong" Q3 results and positive Q4 guidance [2] - Macquarie upgraded Unity (U) to Outperform from Neutral with a price target of $50, up from $33, after a Q3 earnings beat as Vector continues to improve [2] - Oppenheimer upgraded JFrog (FROG) to Outperform from Perform with a price target of $75, citing strong quarterly performance and accelerating Cloud growth [3] - Benchmark upgraded Trade Desk (TTD) to Buy from Hold with a price target of $65, noting revenue growth of about 22% year-over-year excluding political acceleration [3] - KeyBanc upgraded Datadog (DDOG) to Overweight from Sector Weight with a price target of $230 post Q3 report, highlighting revenue acceleration excluding OpenAI and sustained visibility into OpenAI spending [4] Downgrades - Williams Trading downgraded Canada Goose (GOOS) to Sell from Hold with a price target of C$12, down from C$20, indicating that the company will not be sold or go private [5] - Needham downgraded CarMax (KMX) to Hold from Buy, citing a choppy macro recovery and increased competition leading to negative unit growth [5] - RBC Capital also downgraded CarMax to Sector Perform from Outperform with a price target of $34, down from $59 [5] - Needham downgraded Penn Entertainment (PENN) to Hold from Buy, removing the previous $22 price target after the early termination of the partnership with Disney's ESPN [5] - Goldman Sachs downgraded Sweetgreen (SG) to Sell from Neutral with a price target of $5, down from $10, due to pressures on both revenue and profitability [5] - UBS downgraded Cogent (CCOI) to Neutral from Buy with a price target of $27, down from $50, following softer results and a dividend cut [5]

Core Insights - Sweetgreen's stock has experienced a dramatic decline of 80% this year, raising concerns about its business model and future prospects [1][2]. Company Performance - The company's sales growth has slowed significantly, with a year-over-year increase of just under 3% in the first half of the year, totaling $351.9 million [3]. - Sweetgreen has not yet turned a profit, and its gross margin is insufficient to indicate a clear path to profitability [8]. Financial Metrics - Total restaurant operating costs accounted for nearly 82% of revenue in the first half of the year, leading to a net loss of $48.2 million, which is greater than the $40.5 million loss from the previous year [9]. - The current gross margin stands at 8.51%, indicating poor financial health despite the implementation of automation in its operations [11]. Market Conditions - Economic factors, including high inflation, have led consumers to cut back on discretionary spending, which may negatively impact Sweetgreen's sales, especially given its high-priced menu items [6]. - The company's focus on a niche market of high-priced salads may limit its appeal to a broader customer base, raising concerns about its growth potential [5]. Investment Considerations - Despite a previous surge in stock price, the current trading at a price-to-sales ratio of 1.4 suggests that the stock may appear cheap, but significant risks and uncertainties remain [11]. - The potential for worsening economic conditions, such as a recession, could further challenge Sweetgreen's ability to attract new customers and maintain its market position [12].

Financial Performance - Revenue for the thirteen weeks ended September 28, 2025, was $172,393,000, a decrease of 0.6% compared to $173,431,000 for the same period in 2024[25] - Net loss for the thirty-nine weeks ended September 28, 2025, was $84,343,000, compared to a net loss of $61,343,000 for the same period in 2024, representing a 37.5% increase in losses[31] - Total restaurant operating costs for the thirteen weeks ended September 28, 2025, were $149,879,000, an increase of 8.3% from $138,490,000 in the same period in 2024[25] - Cash and cash equivalents at the end of the period were $134,107,000, down from $237,263,000 at the end of the same period in 2024, indicating a decrease of 43.5%[31] - The Company recorded a net loss of $36,146,000 for the thirteen weeks ended September 28, 2025, resulting in a basic and diluted loss per share of $0.31[97] Expansion and Growth - The company opened 6 new restaurants in the thirteen weeks and 20 new restaurants in the thirty-nine weeks ended September 28, 2025[33] - The company aims to expand its market presence with a total of 266 restaurants across 23 states and Washington, D.C. as of September 28, 2025[33] - The company had 23 facilities under construction as of September 28, 2025, compared to 9 facilities under construction as of December 29, 2024, showing significant expansion efforts[61] Revenue Streams - Revenue from Owned Digital Channels increased to $60.8 million for the thirteen weeks ended September 28, 2025, up 20.3% from $50.6 million in the prior year[46] - In-Store Channel revenue decreased to $65.9 million for the thirteen weeks ended September 28, 2025, down 15.3% from $77.9 million in the same period last year[46] - Revenue recognized from gift card liability for the thirty-nine weeks ended September 28, 2025, was $623,000, compared to $700,000 for the same period in 2024[49] Expenses and Costs - The company incurred $30,900,000 in general and administrative expenses for the thirteen weeks ended September 28, 2025, compared to $36,777,000 in the same period in 2024, a decrease of 16.5%[25] - Stock-based compensation expense for the thirty-nine weeks ended September 28, 2025, was $24,032,000, down from $30,214,000 in the same period in 2024, a decrease of 20.5%[31] - Operating lease costs for the thirty-nine weeks ended September 28, 2025, totaled $53.4 million, compared to $48.2 million for the same period in 2024, marking an increase of approximately 10.6%[68] Impairment and Contingent Considerations - The Company recognized a non-cash impairment charge of $4.3 million for four store locations during the thirteen weeks ended September 28, 2025[56] - The Company recorded non-cash impairment charges of $9.6 million associated with nine store locations for the thirty-nine weeks ended September 28, 2025[57] - Cumulative payments related to contingent consideration reached $23.4 million as of September 28, 2025, with $6.8 million issued in Class A common stock and $16.6 million in cash[53] - The fair value of contingent consideration as of September 28, 2025, was $5.9 million, down from $15.0 million as of December 29, 2024[54] Stock and Equity - The company had 30.5 million shares of common stock reserved for issuance as of September 28, 2025, down from 31.7 million shares as of December 29, 2024[72] - The balance of stock options was 14,035,191 shares, with a weighted average exercise price of $10.65 and an intrinsic value of $18,446,000[81] - The balance of restricted stock units (RSUs) as of September 28, 2025, was 563,811 shares, with a weighted-average grant date fair value of $14.57[86] Legal and Regulatory Matters - The Company is subject to various claims and lawsuits, but does not anticipate that these will materially affect its financial position or operations[102] - The Company has lease commitments under various operating leases, which include contingent rent based on sales exceeding specified thresholds[100] Market Risks - The Company operates solely within the United States and faces market risks including commodity price risks and interest rate risk, with no material changes in exposure reported[231]

Core Insights - Sweetgreen, Inc. reported revenue of $172.39 million for the quarter ended September 2025, reflecting a year-over-year decline of 0.6% [1] - The company's EPS was -$0.27, compared to -$0.18 a year ago, indicating a deterioration in earnings performance [1] - Revenue fell short of the Zacks Consensus Estimate of $180.01 million, resulting in a surprise of -4.23% [1] - The EPS surprise was -50%, with the consensus EPS estimate being -$0.18 [1] Financial Performance Metrics - Same-store sales decreased by 9.5%, which was worse than the average estimate of -6.4% based on five analysts [4] - The number of ending restaurants was 266, slightly below the average estimate of 267 based on five analysts [4] - New restaurant openings totaled 6, compared to the average estimate of 7 based on four analysts [4] Stock Performance - Sweetgreen's shares have returned -16.7% over the past month, contrasting with the Zacks S&P 500 composite's increase of +1.3% [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Sweetgreen, Inc. reported a quarterly loss of $0.27 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.18, marking a 50% earnings surprise to the downside [1] - The company has consistently missed consensus EPS estimates over the last four quarters [2] Financial Performance - Sweetgreen's revenues for the quarter ended September 2025 were $172.39 million, falling short of the Zacks Consensus Estimate by 4.23% and down from $173.43 million year-over-year [2] - The company has only surpassed consensus revenue estimates once in the last four quarters [2] Stock Performance - Sweetgreen shares have declined approximately 79.8% since the beginning of the year, contrasting sharply with the S&P 500's gain of 15.6% [3] Future Outlook - The company's earnings outlook is critical for assessing future stock performance, with current consensus EPS estimates at -$0.23 for the upcoming quarter and -$0.74 for the current fiscal year [4][7] - The Zacks Rank for Sweetgreen is currently 4 (Sell), indicating expectations of underperformance in the near future [6] Industry Context - The Retail - Restaurants industry, to which Sweetgreen belongs, is currently ranked in the bottom 12% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than a factor of 2 to 1 [8]