Latest news with #HotHarissaPitaChips
Yahoo
20-05-2025
- Business
- Yahoo
Why Are Cava Shares Falling Despite Strong Results, and What Does It Mean for Investors?
Cava once again saw tremendous same-store sales growth in its latest quarter. The company has a huge expansion opportunity still in front of it. It has all the ingredients to be the next Chipotle-type growth story. 10 stocks we like better than Cava Group › Despite being one of the fastest-growing restaurant concepts around, Cava Group's (NYSE: CAVA) stock has failed to gain any traction this year. This was evident once again after its stock slipped despite another strong showing from the fast-casual Mediterranean-themed restaurant operator when it reported its fiscal first-quarter results. The stock is now down around 14% in 2025, as of this writing. Let's dig into the company's fiscal Q1 results to see if investors should buy the dip in the stock. Cava's string of double-digit same-store sales growth continued in its fiscal Q1, which ended April 20. Its same-restaurant sales climbed 10.8%, with a 7.5% increase in guest traffic and a 3.3% rise in price and mix. That was just ahead of the 10.3% increase that analysts had projected, as compiled by StreetAccount. It also continued its strong streak of recent same-store sales results over the past four quarters. Metric Q2 2024 Q3 2024 Q4 2024 Q1 2025 Same-store sales growth 14.4% 18.1% 21.2% 10.8% Traffic 9.5% 12.9% 15.6% 7.5% Price and mix 4.9% 5.2% 5.6% 3.3% Data source: Cava Group earnings press releases. The introduction of grilled steak last summer was the catalyst for the company's strong same-store sales growth, and it said this past quarter that it was continuing to see customers add higher-priced items to its orders, such as pita chips and house-made juices. It called out strength across geographies and income brackets as well, noting that the company was benefiting from customers trading up from fast food as well as trading down from casual-dining restaurants. Its summer menu introductions this year will include chef-curated bowls and Hot Harissa Pita Chips, and it's testing new menu items such as chicken shawarma in select markets. It's also looking to help drive growth by adding a tiered structure to its loyalty program that will tailor benefits and look to increase customer engagement. Cava's overall revenue for the quarter climbed 28% year over year to $328.5 million. It opened 15 new locations in the quarter, bringing its total to 382 restaurants, an 18% year-over-year increase. It is now operating in 26 states after entering Indiana with plans to enter the new markets of Detroit and Pittsburgh later this year. Overall, it plans to open between 64 and 68 new locations in 2025. Its restaurant-level margins (RLMs) stayed steady at 25.1% in the quarter versus 25.2% a year ago. RLMs measure the profitability of restaurants before corporate costs and are an important metric in the industry. Cava's RLMs were just below the 26.2% that Chipotle Mexican Grill produced in Q1, showing how strong the company's operating performance is compared to one of the leaders in the industry. On the profitability front, Cava's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 35% year over year to $44.9 million. The company produced $38.6 million in operating cash flow in the quarter and free cash flow of $2.7 million. This demonstrates that Cava is able to expand its locations while living within its means, not taking any undue risks. Looking ahead, the company raised its 2025 adjusted EBITDA outlook, taking it from between $150 million and $157 million to a new range of $152 million to $159 million. Meanwhile, it maintained its forecast for same-store sales to increase by 6% to 8% with RLMs ranging from 24.8% to 25.2%. It implemented an approximate 1.7% price increase in early January and has no plans for additional increases. It said its exposure to tariffs is limited as the majority of its ingredients are domestically sourced or covered under existing contracts. Trading at a forward price-to-earnings (P/E) ratio of nearly 174 and a price-to-sales ratio of 9.4 based on 2025 analyst estimates, Cava stock is not cheap. And right now, valuation is the biggest risk to the stock, especially if consumer spending begins to slow. However, with fewer than 400 locations and its same-store sales booming, the company has a huge expansion opportunity in front of it. It's looking to reach at least 1,000 restaurants by 2032, which is nearly triple the number of locations it has today. Overall, Cava has all the ingredients of a highly successful emerging restaurant stock, with strong same-store sales, robust RLMs, attractive average unit volumes, and a long runway for expansion. As such, long-term investors can look to take a position in this strong story. 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The Motley Fool recommends Cava Group and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Why Are Cava Shares Falling Despite Strong Results, and What Does It Mean for Investors? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16-05-2025
- Business
- Yahoo
CAVA Group (NYSE:CAVA) Reports Strong Q1 Earnings with Nearly US$26 Million Net Income
CAVA Group reported a 12% increase in its share price over the last month, as the broader market also witnessed positive momentum. The company's robust first-quarter earnings report, showing a significant rise in sales and net income, likely contributed to its stock ascent, while maintaining strong annual guidance provided additional support. Meanwhile, the introduction of new products, like the Hot Harissa Pita Chips, paired with creative marketing efforts, may have added to investor enthusiasm. Despite positive news for CAVA, broader market gains and easing trade tensions between the U.S. and China contributed to the overall upward market trend. Every company has risks, and we've spotted 2 possible red flags for CAVA Group (of which 1 is a bit unpleasant!) you should know about. Find companies with promising cash flow potential yet trading below their fair value. The recent introduction of new products like the Hot Harissa Pita Chips has likely played a role in influencing investor sentiment, supporting the recent 12% share price increase over the last month. Over a longer period, CAVA Group's total return, including dividends, was 28.12% over the last year. This performance contrasts with the broader market's 11.2% return and the U.S. Hospitality industry's 12% return over the same period, highlighting CAVA's strong market presence and positive investor outlook. Expansion plans into new geographic markets, such as Detroit and South Florida, are part of the company's growth strategy, which may drive revenue growth. However, these initiatives can add pressure to profit margins due to potential increased costs and brand recognition challenges. In the context of its revenue and earnings forecasts, revenue is expected to grow by 16.7% annually, while earnings are forecasted to increase by 5.9% annually. This steady growth trajectory may support future earnings but could be impacted if expansion costs are not offset by higher sales volumes. Currently, CAVA's share price is trading at US$93.32, which is at a 19.3% discount to the analyst consensus price target of US$115.66. This indicates potential for upward movement if the company successfully navigates its expansion plans and technological advancements. The company's ability to maintain stronger-than-industry returns will be crucial in justifying its higher valuation ratios compared to its peers. These factors will be essential in assessing CAVA's ability to achieve the projected price targets. Learn about CAVA Group's historical performance here. 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. Companies discussed in this article include NYSE:CAVA. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
Yahoo
28-04-2025
- Business
- Yahoo
CAVA Group (NYSE:CAVA) Climbs 13% In A Week
CAVA Group recently launched its Hot Harissa Pita Chips and a seasonal Strawberry Citrus Juice, supplemented by a promotional music video. These initiatives might have helped support CAVA's 13% price gain last week, despite broader market indexes declining, with the Dow down 0.3% and the S&P 500 and Nasdaq Composite also lower. Additionally, CAVA's recent inclusion in the S&P 1000 index could have further increased investor interest. In contrast, the broader market's decline was countered slightly by CAVA's positive performance, possibly due to these engaging product launches and its strategic index addition. We've spotted 1 weakness for CAVA Group you should be aware of. AI is about to change healthcare. These 26 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. The recent news of CAVA Group's product launches and inclusion in the S&P 1000 index might influence investor sentiment positively, driving short-term share price gains. Over the longer term, CAVA's shares experienced a total shareholder return of 28.63% over the last year, showcasing its substantial growth compared to its industry and market peers. Specifically, CAVA outperformed the US Hospitality industry which returned 2.8%, and the broader US market which returned 7.5% over the same period. The impact of launching new products such as the Hot Harissa Pita Chips and a strategic market entry into the S&P 1000 could potentially boost CAVA's revenue by widening its consumer base and improving market visibility. However, this growth comes with margin pressure risks, more evident with the introduction of premium-priced menu items like grilled steak. Analysts forecast earnings will decrease from US$130.32 million to US$109.6 million by April 2028, emphasizing the challenges ahead in balancing costs against revenue growth. Despite these risks, analysts have set a consensus price target of US$117.64, suggesting upside potential from the current share price of US$81.30. This reflects a significant discount to the price target, signaling that the market might currently undervalue the company's future prospects. Investors should consider the implications of CAVA's growth strategy on their long-term forecasts and evaluate the underlying assumptions that inform these analyst expectations. Learn about CAVA Group's future growth trajectory here. 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. Companies discussed in this article include NYSE:CAVA. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
