Geez -- if you look up recent articles about salad purveyor Sweetgreen (SG 3.83%), the news doesn't seem too good. Here are some headlines:
- Why is salad titan Sweetgreen wilting?
- How Sweetgreen Became Millennial Cringe
- Sweetgreen vs. Beyond Meat: Which Struggling Stock Is the Better Buy Today?
- Sweetgreen development chief to depart amid slower expansion plans
- Why Sweetgreen (SG) stock is nosediving
Image source: Getty Images.
Indeed, the stock is down a frightening 76% over the past year (as of Jan. 22), and it has averaged annual losses of 8.6% over the past three years.
What's going wrong? Well, several things:
- Its growth is slowing, as it plans to open fewer stores in 2026 than it did in 2025.
- In its third quarter, revenue growth was roughly flat with year-earlier levels and same-store sales (from locations open a year or more) were down nearly 10% year over year. The company posted a net loss, not a profit.
- It has faced operational problems, with many locations not meeting standards -- though that number has shrunk.
- Inflation is making it hard to keep costs -- and prices -- down.
- Inflation has also hit many consumers hard, making it difficult to justify buying fairly costly salads.
- It has seen some executives depart in recent months, including its co-founder and chief brand officer.
NYSE: SG
Key Data Points
All those gloomy factors explain why the stock now seems undervalued. There's no current or forward-looking price-to-earnings (P/E) ratio, as there are no positive earnings, but the recent price-to-sales ratio of 1.21 is well below the five-year average of 1.9.
That seemingly low valuation can make the stock look attractive, but it should only be attractive if you're confident that Sweetgreen will turn its fortunes around. It's certainly trying to. In the third-quarter report, Co-Founder and Chief Executive Officer Jonathan Neman noted: "Amid a challenging macro backdrop, our priorities remain clear: delivering operational excellence, accelerating menu innovation, and driving disciplined growth. We are focused on the process of building a strong foundation, and I am extremely confident that our leadership team and focused strategy will lead Sweetgreen back to sustained, profitable growth."
One strategy has been investing in more automation to assemble salads.
Sweetgreen may successfully turn itself around, but for now I would wait and watch instead of buying. I don't think the company is yesterday's news, but I do recognize that this could be a value trap instead of a bargain, at least right now. There are plenty of more attractive stocks out there.
