The stock of Cava Group (CAVA) is down 17% after the restaurant chain reported weak same-store sales and lowered its full-year guidance.
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.
The company known for its Mediterranean cuisine announced second-quarter earnings per share (EPS) of $0.16, which beat the $0.13 expected on Wall Street. However, revenue of $280.6 million fell short of the $285.6 million consensus expectation of analysts. Restaurant sales were up 20% from a year earlier, due mostly to new restaurant openings.
Same-store sales, a metric that tracks the performance of restaurants open at least one year, rose 2.1% during Q2. While Cava managed to buck the industry trend of same-store sales declines, Wall Street was forecasting growth of 6.1% for the quarter.
Cava’s earnings per share. Source: Main Street Data
Lowered Guidance
In terms of forward guidance, Cava Group said it now expects same-store sales growth of 4% to 6% for all of this year, down from its previous outlook that called for growth of 6% to 8%. Cava reiterated several other key financial projections for this year.
Management said it still anticipates earnings of $152 million to $159 million in 2025. Cava also maintained its forecast for restaurant-level profit margins of 24.8% to 25.2%. Cava Group also announced that it participated in a $25 million Series B funding round for Hyphen, a company that automates plate and bowl portioning for restaurant chains.
Is CAVA Stock a Buy?
The stock of Cava Group has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on 10 Buy and seven Hold recommendations issued in the last three months. The average CAVA price target of $106.87 implies 26.41% upside from current levels. These ratings could change after the company’s financial results.
