Consumers aren't cutting back on meals with family but fast meals: Morgan Stanley's Harbour
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Yahoo
7 hours ago
- Yahoo
Cava Stock Is Crashing. Is It Time to Buy?
Key Points Cava stock crashed after the restaurant chain missed expectations for the second quarter. Same-store sales slowed, and the company slashed its full-year outlook. The stock is still pricey, but it looks more appealing than in the past. 10 stocks we like better than Cava Group › "The next Chipotle" isn't getting much love from investors these days. Shares of Cava Group (NYSE: CAVA) crashed this week following a second-quarter report that missed the mark. Revenue came up short of analyst expectations, and same-store sales grew by just 2.1%. The fast-casual restaurant chain also slashed its full-year outlook for same-store sales to a range of 4% to 6%, a full two percentage points lower than its previous guidance. What's happening to Cava? Cava CFO Tricia Tolivar pointed to a few factors that impacted the company's Q2 results. First, Cava added steak to its menu last year, giving it a boost that the company is now lapping. The steak launch made the comparison tougher and contributed to the slowdown in same-store sales. Second, the restaurants that opened in 2024 suffered what Tolivar called a "honeymoon effect." Those restaurants outperformed sales expectations initially, but that quick initial growth couldn't be sustained. The company hasn't experienced this type of post-opening slowdown in previous years, so it was unexpected. The state of the economy is also playing a role. Tolivar noted that Cava wasn't immune to the macroeconomic environment but that attach rates for premium items hadn't changed. It's unclear whether economic factors impacted the number of visits to Cava's restaurants, although the company did disclose that same-store sales had started to reaccelerate toward the end of the quarter. Same-store guest traffic was roughly flat in Q2. Setting big goals Despite the troubles in Q2, Cava still has its sights set on greatly expanding its restaurant base. The company opened 16 new restaurants in Q2, bringing its total restaurant count to 398. It expects its full-year restaurant-opening tally to reach 68 or 70. By 2032, Cava is planning to have 1,000 restaurants in operation. The company will need to average around 80 restaurants openings annually starting in 2026 to hit that number. At its current average unit volume (AUV) of $2.9 million, revenue would reach $2.9 billion with 1,000 restaurants. There's likely some room to grow AUV. Chipotle averages about $3.1 million in annual sales per restaurant, for comparison. Cava's revenue is expected to reach around $1.18 billion this year. Should you buy the dip? Cava was an extremely expensive stock at its late-2024 peak, at one point trading for around 18 times annual sales. The valuation has since fallen back to earth, but the stock still trades at a premium to industry leader Chipotle. Cava stock now trades for around 7.3 times trailing-12-month sales, compared to roughly 5 for Chipotle. Cava should be able to grow faster than Chipotle by virtue of its restaurant base being much smaller. Chipotle operates just over 3,800 restaurants or nearly 10 times as many locations as Cava. Even with weak same-store sales growth in Q2, Cava's total revenue rose by 20.3% year over year. New restaurants can continue to drive double-digit revenue growth, although a tough economy could throw a wrench in the company's expansion plans. If Cava's slowdown turns out to be more than just some tough comparisons, or if the U.S. economy worsens, the company may need to slow down its pace of restaurant openings. The good news is that the Cava model appears to work. The company's 2025 restaurant openings are on track to reach AUVs above $3 million, inching closer to Chipotle levels. Cava doesn't seem like a fad that's going to fade away like some other fast-casual chains that ran into roadblocks. Cava is undoubtedly popular, and the company has a good chance at following in Chipotle's footsteps. Cava's valuation still looks to be on the high side, especially with some uncertainty surrounding its same-store sales growth trajectory. But for those who found the stock too expensive in the past, the post-earnings crash presents a more attractive entry point for long-term investors. Should you buy stock in Cava Group right now? Before you buy stock in Cava Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Cava Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,544!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,113,059!* Now, it's worth noting Stock Advisor's total average return is 1,062% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Cava Group and recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Cava Stock Is Crashing. Is It Time to Buy? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
9 hours ago
- Yahoo
One of largest fast casual restaurants is headed to Pekin. See when it opens
A new Chipotle Mexican Grill franchise is set to open in Pekin this fall. The franchise at 3440 Court Street is scheduled to open in late September at the former site of the Bob Evans restaurant, Chipotle spokesperson Mohit Patel said. The new restaurant is located next to Starbucks and near the growing East Court Village shopping center, which this fall is opening three new national chain stores. 'It's always exciting to see new businesses choose Pekin, because it means more jobs for our residents, more choices for our families, and another reason for visitors to stop and enjoy our community,' said Amy McCoy, the Pekin Area Chamber of Commerce executive director. 'Chipotle's investment shows confidence in Pekin's growth and the bright future we're building together.' Chipotle has more than 3,800 locations worldwide, placing it among the top 20 fast food franchises in the world by numbers of locations. There are nearly 200 in Illinois, including two other locations in the Peoria area, near Northwoods Mall and another in the East Peoria Levee District. Pekin news: From lost opportunity to long-term investment: Inside Pekin's bold $50 million road project The Pekin location will feature the brand's signature "Chipotlane," said Patel, a drive-thru pick-up lane that allows guests to pick up digital orders without leaving their cars. 'We are always looking for communities where we can serve responsibly sourced, classically cooked, real food and establish new local partnerships,' Patel said. 'Pekin is a great fit.' The Chipotle location is accepting applications for employees at the new location. Chipotle offers medical, dental, and health insurance and up to $5,250 a year in tuition assistance, Patel said. This article originally appeared on Journal Star: Chipotle Mexican Grill opening new location in Pekin, Illinois
Business Insider
13 hours ago
- Business Insider
Why Morgan Stanley Increased Its Apple (AAPL) iPhone Production Estimate
Investment firm Morgan Stanley (MS) recently increased its estimate for Apple's (AAPL) iPhone production in the September quarter by 8%. Indeed, it is now forecasting 54 million units instead of 50 million for the tech giant. This change is due to stronger-than-expected iPhone sales in the June quarter, which brought inventory levels below normal and opened up more room for restocking. Analysts led by Erik Woodring highlighted that the increased production is focused entirely on the upcoming iPhone 16 and iPhone 16 Pro Max, with each contributing an extra 2 million units. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Interestingly, the team at Morgan Stanley is becoming more optimistic about Apple overall. In fact, it believes that many of the same positive trends from last year are still in place, such as longer iPhone upgrade cycles, strong demand buildup, and new product designs in the pipeline. It also notes that the peak risks from tariffs have likely passed. Additionally, Apple hasn't raised prices for its Services segment in two years, which is something the analysts view as an underused strategy that could drive future growth. As a result, they believe that earnings estimates are likely to trend higher, which historically has led to rallies for Apple stock. Looking further ahead, the analysts kept their iPhone 17 production forecast unchanged at 80 to 85 million units for the second half of Calendar Year 2025. This range is slightly below or roughly in line with the 84 million new-model iPhones produced in the second half of 2024. They also noted that iPhone production in the December quarter tends to be more volatile than in the September quarter. Indeed, excluding the COVID years (2020 and 2021), December builds have fluctuated from 35% to 71% higher than the previous quarter. Is Apple a Buy or Sell Right Now? Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAPL stock based on 16 Buys, 11 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $239.18 per share implies 3.5% upside potential.
