Sweetgreen (NYSE:SG) delivers shareholders 11% return over 1 year, surging 16% in the last week alone

Diversification is a key tool for dealing with stock price volatility. Of course, the aim of the game is to pick stocks that do better than an index fund. Sweetgreen, Inc. (NYSE:SG) has done well over the last year, with the stock price up 11% beating the market return of 11% (not including dividends). Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.

Since the stock has added US$241m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Sweetgreen

Sweetgreen wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last twelve months, Sweetgreen's revenue grew by 29%. That's a fairly respectable growth rate. Buyers pushed the share price 11% in response, which isn't unreasonable. If revenue stays on trend, there may be plenty more share price gains to come. But before deciding this growth stock is underappreciated, you might want to check out profitability trends (and cash flow)

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Sweetgreen in this interactive graph of future profit estimates.

A Different Perspective

Sweetgreen shareholders have gained 11% for the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 12%. However, that falls short of the 94% gain it has made, for shareholders, in the last three months. It's worth taking note when returns accelerate, as it can indicate positive change in the underlying business, and winners often keep winning. It's always interesting to track share price performance over the longer term. But to understand Sweetgreen better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Sweetgreen .

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.