Investment Thesis
Sweetgreen faces fundamental operational distress with negative operating margins (-21.3%) and negative free cash flow (-$29.6M) despite minimal revenue growth (0.4% YoY), indicating the core restaurant business is unprofitable and burning cash. While the balance sheet offers a financial cushion ($156.8M cash, zero long-term debt), this masks deteriorating fundamentals requiring urgent operational improvement; the anomalous 77.9% net margin is driven by one-time gains rather than sustainable business performance.
Strengths
- Strong cash position of $156.8M provides runway for operational turnaround
- Zero long-term debt with Debt/Equity of 0.00x eliminates financial distress risk
- Adequate liquidity ratios (Current 1.61x, Quick 1.58x) to meet short-term obligations
Risks
- Negative free cash flow of -$29.6M indicates unsustainable cash burn in core operations
- Operating margin of -21.3% with negative $34.3M operating income shows unprofitable business model
- Minimal revenue growth of 0.4% YoY combined with negative operating cash flow suggests structural market challenges
- EPS declining 44.3% YoY despite inflated net income from one-time gains signals deteriorating per-share value
Key Metrics to Watch
- Operating Cash Flow trend and path to positive territory
- Operating margin improvement and margin expansion in restaurant segment
- Same-store sales growth and unit economics by location
- Gross profit margin recovery and pricing power
Financial Metrics
Revenue
161.5M
Net Income
125.8M
EPS (Diluted)
$1.05
Free Cash Flow
-29.6M
Total Assets
912.7M
Cash
156.8M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-21.3%
Net Margin
77.9%
ROE
25.7%
ROA
13.8%
FCF Margin
-18.3%
Balance Sheet & Liquidity
Current Ratio
1.61x
Quick Ratio
1.58x
Debt/Equity
0.00x
Debt/Assets
46.4%
Interest Coverage
-1,226.64x
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T13:04:03.431010 |
Data as of: 2026-03-29 |
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