Cava Group, a fast-casual Mediterranean restaurant chain, announced its second-quarter earnings late Thursday, surpassing analyst expectations. On Friday, CAVA stock surged to a new record high.
The company reported an adjusted earnings of 17 cents per share, exceeding the 13 cents anticipated by FactSet. Revenue soared 35%, reaching $231.4 million, compared to the expected $219.5 million from analysts.
This quarter marked Cava’s first earnings drop in six quarters. Same-restaurant sales increased by 14.4%, although this was slower than last year’s growth of 18.2%. Nonetheless, this figure exceeded analysts’ expectations of an 8.2% rise.
CEO Brett Schulman noted that customer traffic grew by 9.5% and the company opened 18 new locations during the quarter.
Following these results, Cava slightly raised its forecasts. The Mediterranean chain now projects same-restaurant sales growth for 2024 to be between 8.5% and 9.5%, up from its earlier estimate of 4.5% to 6.5%. Cava also expects adjusted EBITDA to fall between $109 million and $114 million, compared to the previous guidance of $100 million to $105 million.
Additionally, the company plans to open between 54 and 57 new restaurants, increasing from the previous plan of 50 to 54. Cava anticipates its restaurant-level profit margin will range from 24.2% to 24.7%, compared to May’s forecasts of 23.7% to 24.3%.
Stifel reported on Monday that it is predicting another solid quarter for same-restaurant sales and new store performance. The firm’s analysis of customer location data indicates a sequential improvement in traffic since Q1. Stifel believes in the sustainability of Cava’s sales momentum, anticipating that the Q2 results will reflect the “organic flywheel effect” associated with expanding brand awareness and unit growth.
The firm increased its price target for CAVA stock from $90 to $110 while maintaining a buy rating.
CAVA stock jumped nearly 20% on Friday, closing at a new record high of $122, after declining 0.9% on Thursday, just below Wednesday’s peak of $102.90. The shares are significantly above the buy zone for a cup base after surpassing the 98.69 buy point established on August 16, with the current buy zone extending to 103.62.
Cava Group is currently leading the Retail-Restaurants Group, as noted by IBD Stock Checkup, and CAVA stock has risen approximately 184% this year.