Dr. Stoxx
Stock Trader & Author, Oxford DPhil, Trading Education
CAVA looks attractive near $50, close to its 52-week low, with sales projected to grow more than 20% a year for the next three years. It is still an expensive stock at a P/E above 90. x.comÂ
CAVA's results defy restaurant downturn fears: Q1 same-store sales rose 9.7% versus 6.0% expected, helped by its new pomegranate salmon dish, and every Q1 metric beat. The CFO says Q2 comps are tracking in line with Q1, far above the Street's 4.7%, while full-year comp guidance rose to 4.5-6.5% and adjusted EBITDA guidance to $181-191M. Short interest of 13% should add to strength on the beat. x.com x.comÂ
Cava's share price looks out of line with the restaurant sector. Restaurants are carnage right now, with Chipotle back at $32, so there is little reason for Cava to hold up here. x.comÂ
Restaurant stocks, including Chipotle and Wingstop, are uninvestable right now, with too many better places for money. Most have slowing growth, rising costs and poor margins. Wingstop's growth and margins look better than most, but it is still not a buy. x.com x.comÂ
Cava could become a bargain as investors abandon restaurant and food stocks to chase AI. x.comÂ
Cava Group trades at the EV/sales multiple where Chipotle peaked, despite vastly inferior unit economics. The persistent bid under the stock is ridiculous. A post the author replies to notes Chipotle's permabid lasted six years, about as far as the fast-casual concept can run before gravity resumes. x.com x.comÂ
Chipotle looks expensive on a levels-only valuation screen: at $31.50 it is 77% above the $17.82 upper end of a $14.00-$17.82 fair range. The accompanying screen uses a 1.37 PEG on 9% growth alongside 23x forward earnings; this is based on reported estimates, not fundamental diligence. x.comÂ
Dutch Bros has gotten cheaper after a long slide, now under 30x forward EPS with 35% EPS growth and 3.1x current-year sales with revenue growth around 30%. That is roughly Starbucks' price-to-sales despite 30% versus 3% revenue growth, while Cava trades at 4x sales and 69x forward EPS with 27% revenue growth and the same 35% EPS growth. Same-store sales growth remains far ahead of nearly every other company. x.com x.com x.comÂ
Cava Group's valuation is hard to justify for a restaurant chain at 74x 2028 earnings, a multiple even Chipotle never reached during its hypergrowth phase. That holds even though, as @Brian_Stoffel_ notes, Cava's same-store sales rose about 10%, well ahead of its closest competition, with traffic up about 7%. x.comÂ
Chipotle might finally have bottomed after falling about 50% to a more reasonable valuation, though it is still not a classic cheap stock. EPS is forecast to grow 15-20% while the stock trades at 25x 2027 EPS targets. x.comÂ