CAVA Reports Strong Comp Sales, Raises Questions on Guidance

CAVA Group Inc. shows impressive growth with 21.2% YoY comp sales. Despite missing EPS targets, robust revenue growth of 28.3% raises optimism, although projected future comp sales have investors concerned.

Date: 06-03-2025

AI Rating: 6

Performance Overview

CAVA Group Inc. has demonstrated a noteworthy performance with a 21.2% year-over-year (YoY) increase in comparable restaurant sales during Q4 2024. This growth is particularly significant given the challenges facing the retail/wholesale sector due to food inflation and consumer spending pressures.

In addition to strong comp sales, CAVA reported revenues climbing to $227.4 million, reflecting a 28.3% increase compared to the previous year and surpassing analyst expectations of $223.25 million. This suggests that the company is successfully attracting consumers despite broader economic challenges, which could positively affect stock prices.

Key Metrics:

Earnings Per Share (EPS): CAVA reported an EPS of 5 cents, which was 2 cents below analysts' expectations of 7 cents. This slight miss on earnings did trigger a negative market reaction.
Revenue Growth: The impressive revenue growth of 28.3% indicates a strong demand for CAVA’s offerings, which typically encourages a favorable outlook from investors.
Net Income: Adjusted net income surged to $6.5 million, up from $2 million in the previous year. This remarkable growth in net income can boost investor confidence, though it may also counter the disappointment from the EPS miss.
Profit Margins: The restaurant-level profit margin improved to 22.4% (up 50 basis points), indicating better efficiency in managing costs versus revenue generation.
Future Projections: CAVA expects comp sales to grow between 6% to 8% for 2025, down from 13.4% in 2024. This lowered guidance caused some investors to sell off shares due to concerns over future growth potential, despite recent strong performance.

Piper Sandler's upgrade to an 'Overweight' rating on CAVA reflects confidence in the company’s positioning in the fast-casual dining sector and could potentially attract more positive investor sentiment moving forward.

Stocks: CAVA CMG SG