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Written by Jeremy Bowman for The Motley Fool->
Starbucks and Chipotle both reported positive comparable sales in their first quarters.
Sweetgreen will face a big test when it reports earnings next week.
Shares of Sweetgreen (NYSE: SG) were moving higher last month, even though there was little company-specific news out on the fast-casual salad slinger.
Instead, Sweetgreen seemed to benefit from the broader risk-on mentality in the market as tensions in the Middle East cooled, and the stock might have gotten a boost from earnings reports from industry leaders like Starbucks and Chipotle.
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As a result, the stock finished the month up 33%, according to data from S&P Global Market Intelligence.
As you can see from the chart below, Sweetgreen's movements were erratic, but it did finish the month with a solid gain.
Sweetgreen seemed to benefit from investors doing some bottom-fishing as the beaten-down stock could be a good opportunity if it can execute on its turnaround. While there wasn't anything particularly newsworthy that pushed the stock up last month, sentiment seemed to be enough, with the shares looking cheap by some metrics. Stocks soared through April as tensions cooled in the Middle East and the AI trade came back into fashion. However, Sweetgreen doesn't seem to have direct exposure to either of those factors.
There was some good news from key peers, which shows that restaurant spending may be coming back. Chipotle reported comparable sales up 0.5% in the first quarter, which was an improvement from recent quarters. Meanwhile, at Starbucks, comparable sales in North America jumped 7.1%, showing the turnaround effort under Brian Niccol has been paying off.
That could be encouraging for Sweetgreen as the salad chain tries to win back more customers.
Additionally, it hired a new Chief Development Officer, Ryan Slemons, who could help accelerate Sweetgreen's growth. Retail sales in March were also solid in the latest report, showing consumers continue to spend.
The strong report from Starbucks isn't necessarily meaningful for Sweetgreen, but it shows customers are willing to spend on restaurants.
Sweetgreen will report first-quarter earnings on May 7, and investors are expecting revenue to decline 1.6% to $163.6 million, and for its loss per share to expand from $0.13 to $0.18.
Sweetgreen introduced wraps earlier this year, and we'll get a sense of whether that's helping to drive increased visits to the restaurant. If it's another dismal report, April's gains could be easily wiped out, but it does seem like some of the macro pressure on the business is starting to lift.
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Jeremy Bowman has positions in Chipotle Mexican Grill, Starbucks, and Sweetgreen. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends Sweetgreen and recommends the following options: short June 2026 $36 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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