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CAVA Group, Inc. (CAVA)
NYSE:CAVA
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CAVA Group, Inc.
(NYSE:CAVA)
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Rating:64Neutral
Price Target:
$92.00
▲(15.69% Upside)
Action:ReiteratedDate:02/26/26
The score is driven primarily by improving but uneven financial performance (notably the 2025 revenue/margin step-down and volatile free cash flow) and a positive earnings-call outlook for continued growth and liquidity. Technicals are supportive but look overbought. Valuation is the largest drag due to the very high P/E and no dividend yield provided.
Positive Factors
New‑unit growth & productivity
Sustained unit growth with >100% new‑unit productivity and strong AUVs indicates a repeatable expansion model. Durable franchise scalability improves structural revenue visibility, supports incremental operating leverage, and validates the unit economics needed to fund further multi‑year growth.
Strong liquidity & low leverage
A strong cash position and no outstanding debt provide financial flexibility to fund openings, capex, and working capital. This balance sheet strength lowers refinancing risk, supports sustained investment in operations, and gives time to execute strategy through macro cycles.
Digital & loyalty engagement
High loyalty penetration and rising brand awareness create durable demand, higher frequency, and better customer economics. A sizable direct‑to‑brand digital mix improves margins versus third‑party delivery and enables targeted promotions, supporting long‑term revenue per customer.
Negative Factors
2025 revenue & margin volatility
A material interruption in topline and compressing net margins reduces visibility into sustainable profitability. Durable planning for unit rollouts and long‑term returns becomes harder when recent results deviate meaningfully from prior multi‑year trends, elevating execution risk.
Free cash flow volatility & capex
Intermittent FCF conversion despite rising operating cash flow signals heavy reinvestment and uneven cash conversion. Persistent preopening and capex demands can constrain surplus cash for strategic uses, making funding of growth and margin improvement more sensitive to operating shocks.
Structural margin headwinds
New menu items, higher commodity costs and elevated operating investments (including rising equity comp and tax rate) create sustained margin pressure. These structural cost increases make it harder to sustain target restaurant‑level margins across a rapidly growing unit base.
CAVA Group, Inc. (CAVA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.97B
Dividend YieldN/A
Average Volume (3M)3.93M
Price to Earnings (P/E)109.2
Beta (1Y)1.73
Revenue Growth23.93%
EPS Growth153.50%
CountryUS
Employees10,300
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.04
Shares Outstanding116,377,760
10 Day Avg. Volume5,541,101
30 Day Avg. Volume3,930,611
Financial Highlights & Ratios
PEG Ratio-2.11
Price to Book (P/B)8.92
Price to Sales (P/S)5.90
P/FCF Ratio266.17
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue7.99
Enterprise Value/Gross Profit43.47
Enterprise Value/Ebitda62.55
Forecast
1Y Price Target
$83.89Price Target Upside5.50% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering20
EPS Forecast (FY)0.51
Revenue Forecast (FY)$1.45B
CAVA Group, Inc. Business Overview & Revenue Model
Company DescriptionCAVA Group, Inc. owns and operates a chain of Mediterranean restaurants. The company offers salads, dips, spreads, toppings, and dressings. It sells its products through whole food markets and grocery stores. The company also provides online food ordering services. Cava Group, Inc. was founded in 2006 and is based in Washington, District of Columbia.
How the Company Makes MoneyCAVA generates revenue primarily through its restaurant operations, which include in-store dining, takeout, and catering services. The company makes money by selling its food and beverage offerings directly to consumers at its locations. In addition to in-store sales, CAVA has developed a line of packaged dips and spreads that are distributed through retail grocery channels, creating an additional revenue stream. Strategic partnerships with food distributors and suppliers help optimize costs and ensure a steady supply of high-quality ingredients, contributing to the company's profitability. CAVA also benefits from an increasing consumer trend towards healthier eating, which drives traffic to its restaurants and boosts sales.
CAVA Group, Inc. Key Performance Indicators (KPIs)
Any
Restaurant Count
Indicates the total number of restaurant locations, reflecting the company’s expansion strategy and market penetration. A growing count suggests potential revenue growth and brand presence.
Indicates the total number of restaurant locations, reflecting the company’s expansion strategy and market penetration. A growing count suggests potential revenue growth and brand presence.
Data provided by:
The Fly
The FlyCAVA Group, Inc. Earnings Call Summary
Earnings Call Date:Feb 24, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jun 02, 2026
Earnings Call Sentiment Positive
The call emphasizes significant growth and strong unit economics — record revenue (> $1B), double-digit top-line growth, robust new-unit productivity and strong liquidity — balanced against margin pressure from commodity and LTO costs, elevated investment and capex-driven cash flow reduction. Management provided a constructive FY2026 outlook while taking conservative assumptions for macro uncertainty and flagging near-term margin headwinds (notably salmon, higher tax rate and increased equity compensation). Overall the positive operating momentum, healthy balance sheet and explicit growth plan materially outweigh the headwinds tied largely to planned investments and temporary cost pressures.Q4-2025 Updates
Positive Updates
Record Annual Revenue — First Year over $1B
CAVA surpassed $1.0 billion in revenue for fiscal 2025, with full-year revenue growing 22.5% year-over-year and 63.1% over the last 2 years.
Robust Q4 Top-Line Growth
Fourth quarter revenue grew 21.2% year-over-year to $272.8 million.
Strong Unit Growth and New Unit Productivity
Opened 24 net new restaurants in Q4 and 72 net new restaurants for the full year, ending 2025 with 439 restaurants (a 19.6% year-over-year increase). 2025 cohort NRO AUVs trended above $3.0 million and new-restaurant productivity remained above 100% for the year.
Healthy Unit Economics and Restaurant-Level Profit
Reported restaurant-level profit margin of 21.4% (Q4) and restaurant-level profit of $58.3 million in Q4 (15.7% growth vs Q4 2024). Company expects restaurant-level profit margin between 23.7% and 24.2% in 2026 (preopening).
Adjusted EBITDA and Net Income Improvements
Full-year adjusted EBITDA was $152.8 million, up 21% versus 2024. Q4 adjusted EBITDA was $25.8 million (up 2.6% vs Q4 2024). GAAP net income for FY2025 was $63.7 million (adjusted net income improvement ~26.9% vs prior year).
Strong Liquidity and Zero Debt
Ended the quarter with $393 million in cash and investments, zero debt outstanding, and an undrawn $75 million revolver (with plans to increase size and extend maturity).
Improved Operating Cash Flow
Cash flow from operations for 2025 was $184.8 million versus $161 million in 2024, reflecting improved operating performance.
Digital & Loyalty Momentum
Loyalty contributes roughly one-third of sales; tiered loyalty rollout and invite-only 'Oasis' tier are driving early engagement and modest frequency gains. Brand awareness increased from ~55% to 62% year-over-year.
Operational Improvements — Tech & Equipment Rollouts
Kitchen Display System live in 370 locations (69 retrofits remaining) and TurboChef ovens fully rolled out across the system to improve execution, speed and consistency.
Clear 2026 Operating Outlook
Guidance for fiscal 2026 includes 74–76 net new restaurants, same-restaurant sales of 3%–5%, adjusted EBITDA of $176M–$184M, and targeted restaurant-level margins of 23.7%–24.2% (preopening).
Negative Updates
Soft Q4 Same-Restaurant Sales
Same-restaurant sales in Q4 were only +0.5% year-over-year, though company notes stronger 2-year and 3-year stacks (+21.7% and +33.1%, respectively) and full-year same-restaurant sales of 4%.
Margin Pressure from Food Costs and LTOs
Food, beverage and packaging costs rose to 30.4% of revenue in Q4 (up 50 basis points YoY), driven by tariffs and a limited-time Chicken Shawarma offering.
Investments Increased Operating Expense Mix
CAVA other operating expenses increased to 13.4% of revenue (up 60 bps YoY) due to higher third-party delivery mix and KDS-related technology costs; G&A (ex-SBC) ticked up 10 bps to 10.5% of revenue in Q4.
Preopening and Capital Spend Elevated
Preopening expenses increased to $4.6 million in Q4 versus $2.7 million prior-year (up $1.9M) reflecting more units under construction and higher per-unit costs; free cash flow for 2025 was $26.1M, down $26.8M YoY due to capital expenditures.
Short-Term EBITA Growth Muted in Q4
Despite strong revenue growth, Q4 adjusted EBITDA grew only 2.6% YoY as results were partially offset by growth investments and higher preopening costs.
Upcoming Margin Headwind from Salmon
Company expects the new salmon item to be a ~100 basis point headwind to restaurant-level margin beginning in Q2, although it is expected to be penny-profit neutral overall.
Rising Equity Compensation and Tax Rate
Equity-based compensation for 2025 was $18.1M; 2026 SBC is expected to be $22M–$24M with an LTI program change accelerating recognition. Effective tax rate expected to rise to ~25%–30% in 2026 (from 10% in 2025) reducing after-tax margins, though cash taxes remain immaterial until NOLs are fully utilized.
Conservative 2026 Assumptions Due to Macro Uncertainty
Management embedded prudence in 2026 guidance: a 90% new-restaurant productivity assumption (down from 2025 cohort >100%) and low-to-mid single-digit same-restaurant sales guidance to account for uncertain consumer/backdrop.
Operational Scaling Requires People Investment
Company highlighted talent as the key growth constraint; ongoing investments in AGM roles and field leadership (60% of AGM roles filled) increase near-term labor spend and G&A to build the bench for future unit growth.
Company Guidance
CAVA’s 2026 guidance calls for 74–76 net new restaurants, CAVA same‑restaurant sales of 3%–5%, and a restaurant‑level profit margin of 23.7%–24.2% (with preopening costs of $19.5M–$20M), driving adjusted EBITDA (including the burden of preopening) of $176M–$184M; the outlook embeds a ~90% new‑restaurant productivity assumption, assumes a ~1.4% in‑restaurant price increase taken in Jan‑2026 with no further price increases, expects salmon (launching Q1/Q2) to be a ~100 bps restaurant‑margin headwind but penny profit neutral, anticipates low single‑digit food/bev/packaging inflation and low‑to‑mid single‑digit labor inflation (including modest AGM investments), projects G&A as a percent of revenue to remain relatively flat, plans stock‑based compensation of $22M–$24M in 2026 (with ~55% of that expense in H1 due to vesting timing), expects an effective tax rate of ~25%–30% for the year (slightly lower in H1), and enters the year with $393M cash & investments, 0 debt and a $75M undrawn revolver (with plans to increase/extend it in Q1).CAVA Group, Inc. Financial Statement Overview
Summary
Multi-year turnaround with solid profitability in 2023–2024 and rising operating cash flow through 2025, but 2025 shows a meaningful slowdown in revenue and net margin, softer ROE, higher debt (per statements), and volatile free cash flow that reduces confidence in durability.Income Statement
Revenue expanded strongly in 2023 (+29%) and 2024 (+32%), but 2025 annual revenue declined materially (-25%), creating a clear near-term growth interruption. Profitability improved meaningfully from losses in 2021–2022 to solid profits in 2023–2024, with 2024 showing a strong net margin (~13.5%). However, 2025 profitability cooled materially (net margin ~4.5%), and gross margin shows a sharp step-up in 2025 versus prior years that appears inconsistent with the multi-year run-rate, adding uncertainty around comparability.62
Positive
Balance Sheet
The balance sheet has strengthened versus earlier years, with equity turning positive by 2023 and rising through 2025, alongside growing total assets. Leverage looks manageable in 2023–2024 (debt-to-equity ~0.59 and ~0.54), but total debt increased in 2025, which reduces flexibility if the 2025 revenue/profit slowdown persists. Returns on equity peaked in 2024 (~18.7%) and fell back in 2025 (~4.9%), signaling weaker efficiency/earnings power most recently.58
Neutral
Cash Flow
Cash generation has improved substantially from 2021–2022, with operating cash flow ramping to ~$97M (2023), ~$161M (2024), and ~$185M (2025). That said, free cash flow has been volatile: negative in 2021–2023, positive in 2024 (~$53M), then lower in 2025 (~$26M), implying heavier reinvestment and/or less conversion of operating performance into residual cash. Overall, cash flow momentum is positive, but consistency and free-cash-flow durability are still developing.55
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.18B | 963.71M | 728.70M | 564.12M | 500.07M |
| Gross Profit | 216.81M | 241.81M | 180.35M | 97.98M | 82.15M |
| EBITDA | 144.46M | 121.31M | 78.86M | 27.95M | 12.07M |
| Net Income | 63.74M | 130.32M | 13.28M | -58.99M | -37.39M |
Balance Sheet | |||||
| Total Assets | 1.36B | 1.17B | 983.76M | 583.88M | 362.19M |
| Cash, Cash Equivalents and Short-Term Investments | 282.92M | 366.12M | 332.43M | 39.13M | 140.33M |
| Total Debt | 466.25M | 378.71M | 336.20M | 314.73M | 15.34M |
| Total Liabilities | 580.37M | 474.10M | 412.95M | 1.03B | 755.22M |
| Stockholders Equity | 779.66M | 695.57M | 570.80M | -448.50M | -393.02M |
Cash Flow | |||||
| Free Cash Flow | 26.14M | 52.90M | -41.70M | -98.28M | -53.02M |
| Operating Cash Flow | 184.84M | 161.03M | 97.10M | 6.04M | 3.39M |
| Investing Cash Flow | -273.04M | -108.13M | -138.81M | -104.16M | -56.31M |
| Financing Cash Flow | 5.00M | -19.20M | 335.01M | -3.08M | 143.15M |
CAVA Group, Inc. Technical Analysis
Positive
79.52
Price Trends
67.12
Positive
60.75
Positive
68.53
Positive
Market Momentum
4.14
Negative
61.66
Neutral
60.37
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAVA, the sentiment is Positive. The current price of 79.52 is above the 20-day moving average (MA) of 71.48, above the 50-day MA of 67.12, and above the 200-day MA of 68.53, indicating a bullish trend. The MACD of 4.14 indicates Negative momentum. The RSI at 61.66 is Neutral, neither overbought nor oversold. The STOCH value of 60.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CAVA.
CAVA Group, Inc. Risk Analysis
CAVA Group, Inc. disclosed 53 risk factors in its most recent earnings report. CAVA Group, Inc. reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CAVA Group, Inc. Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $3.17B | 15.71 | 33.74% | 2.11% | 4.90% | 27.14% | |
64 Neutral | $8.97B | 109.16 | 8.64% | ― | 23.93% | 153.50% | |
64 Neutral | $6.01B | 13.13 | 177.80% | ― | 23.18% | 138.17% | |
62 Neutral | $6.79B | 41.12 | ― | 0.45% | 15.56% | 79.02% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
58 Neutral | $4.10B | 71.38 | 9.19% | ― | 13.49% | 402.23% | |
44 Neutral | $567.54M | -5.97 | -33.42% | ― | 2.43% | -23.25% |
* Consumer Cyclical Sector Average
CAVA
CAVA Group, Inc.
79.37
-3.28
-3.97%
EAT
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140.38
0.91
0.65%
CAKE
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33.25%
SHAK
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3.41%
WING
Wingstop
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19.01
8.75%
SG
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-75.57%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.