As of February 19, 2025, NYSE: CAVA shareholders have been in the spotlight as investors closely assess its stock performance and prospects. The biggest question I’m thinking is whether Cava is a buy, sell, or hold in 2025?
Current Stock Performance
At this moment, Cava’s stock is trading at $122.33, down $10.98 from the last close. Their market cap is $15.28 billion, with a P/E ratio of 289.85. Over the last 12 months, the stock has experienced extreme volatility, trading as high as $172.43 and as low as $48.10.
Analyst Perspectives
Stock analysts have a range of opinions on Cava’s shares in 2025. The average twelve-month price target is $142.13, implying a potential upside of around 16.5%. That target has a low end of $110.00 and a high end of $190.00. The consensus is a “Moderate Buy,” with eight analysts advising hold and eight recommending buy.
Other analysts voice caution due to the stock’s lofty valuation. One recent analysis made sure to highlight that at the price Cava could become a household name, but its valuation seems stretched even then. Under even villager growth scenarios, it is not a bargain at current levels.
Trajectory and Position in the Market
Cava, however, has shown strong growth: The fast-casual chain reported a 39% jump in quarterly same-store sales growth, with revenue for the third quarter of fiscal 2024 hitting $241.5 million. Same-restaurant sales jumped 18.1%, helped by a 12.9% increase in guest traffic. The number of locations increased 21% year-over-year, to 352 sites.
The new menu-item rollout has gone even better than expected and has driven sales momentum in new dishes like its grilled-steak option. Analysts have boosted their earnings outlooks, crediting these innovations—and a revamped loyalty program—with fueling sustainable growth.
Valuation Considerations
Despite significant growth numbers, worries remain regarding the valuation. Based on comparable restaurants, Cava’s enterprise value per store is more than its much larger competitors including Chipotle Mexican Grill. “This premium multiple implies strong growth is already embedded in the stock, causing some to take a more cautious view on the name.
Future Earnings and General Overview
Cava plans to release financial results for its fourth quarter and all of fiscal 2024 on Feb. 24, 2025. The quarter in question it will lead to earnings of $0.06 per share and revenue of $223.34 million, according to analysts. These results will detail the company’s labor future and could provide some context to the way stock will be evaluated.
FAQ
Q: Does Cava price its stock based on its growth?
A: Cava has seen tremendous growth, but a stock can shrink if it’s perceived as overvalued—meaning analysts believe that future growth has already been baked into its price.
Q: Cava stock soared earlier this year, but some analysts say the stock is overvalued. What should you do?
A: Cava has seen tremendous growth, but a stock can shrink if it’s perceived as overvalued—meaning analysts believe that future growth has already been baked into its price.
Q: What is moving Cava’s stock?
A: They are “strong same-restaurant sales growth, successful innovation of the menu, a solid growth plan, and a solid positioning in the fast-casual dining market.“
Q: What should investors do with Cava stock? Buy, sell, or hold?
A: No analyst has yet raised an alarm over valuations and concerns have been raised about falling margins and falling industrial production, in particular the manufacturing sector despite some of its recent activity is critical; so each investor should independently examine his risk profile and investment horizon. The upcoming earnings release might be the thing worth waiting for.
Q: How does Cava’s valuation stack up against its rival chains?
A: Cava’s enterprise value per unit exceeds that of established competitors like Chipotle, which suggests a premium valuation that’s likely already integrated with expected expansion.
Q: What are some upcoming events that could affect Cava’s stock?
A: February 24, 2025 fourth-quarter and full-year 2024 financial results.
All in all, Cava Group Inc. has proven impressive growth and market expansion, but its current valuation suggests tempered expectations. Investors should keep an eye on the upcoming earnings report and the open market before making any investment choices.
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