In the wake of an impressive Q1 performance, Cava Group CAVA has begun unveiling a growth trajectory that echoes the rise of prominent retail restaurant chains like Chipotle Mexican Grill CMG and Starbucks SBUX.
Since its IPO in June of 2023, the Mediterranean fast-casual food chain has witnessed a nearly +100% increase in its stock value, outshining Starbucks’ -19% and the Zacks Retail-Restaurant Market’s -6%, while also outperforming broader indexes and nudging past Chipotle’s +56%.
Q1 Performance Evaluation
Cava Group’s Q1 sales hit $259.01 million, reflecting a 46% increase over the preceding quarter’s $177.17 million. Surpassing the $246.65 million sales estimate by 5%, the company boasts a Q1 EPS of $0.12, exceeding the projected $0.04 by a whopping 200% and a substantial leap from the $0.02 recorded in Q4.
Projected Growth Trajectory & Overview
Despite its recent IPO, Cava Group, established in 2006, operates outlets across the US. Fueled by its unique build-your-own-bowl model akin to Chipotle, where customers personalize their meals with top-quality ingredients, the company anticipates a 24% sales surge in FY24 and a further 20% in FY25, surpassing $1 billion in total sales. Earnings are projected to spike by 62% this year to $0.34 per share from $0.21 in 2023, with a further 33% rise to $0.46 expected in FY25.
Cava Group’s stock currently carries a Zacks Rank #2 (Buy). Given the company’s promising growth trajectory and the positive trend of earnings estimate revisions, the current rally in CAVA could well persist.
