CAVA Stages Strong Comeback with 11.8% Growth in Five Sessions

In a remarkable turn of events, CAVA Group has staged an impressive comeback, outperforming the industry's growth by a significant margin. Over the past five sessions, CAVA has seen its stock price surge by 11.8%, surpassing the broader market's 3.8% increase. This rally comes on the heels of a 30.4% decline in the company's stock value over the past six months, while the industry as a whole has experienced a modest gain of 2.5%.

Price Performance: CAVA Surpasses Industry Peers

Currently trading at $82.71, CAVA is showing signs of renewed momentum. Although its stock price remains well below its 52-week high of $172.43, it has surpassed its 52-week low of $70. In the past five trading sessions, CAVA has outperformed industry players like Chipotle Mexican Grill (CMG), Brinker International (EAT), and Wingstop Inc. (WING). This impressive growth can be attributed to the company's strong digital engagement, health-forward menus, and efficient store expansion models.

Analysts and Investors Warming Up to Fast-Casual Concepts

Analysts and investors are increasingly warming up to fast-casual concepts like CAVA as signs of stabilization in consumer discretionary spending emerge. There is renewed optimism around brands that have successfully adapted to changing consumer preferences, with a focus on digital engagement, health-forward menus, and efficient store expansion models. This shift in sentiment has contributed to the company's impressive growth, with investors watching closely to determine if this is the beginning of a sustained recovery.

Wall Street Stays Bullish on CAVA’s Growth Trajectory

The Zacks Consensus Estimate for 2025 and 2026 sales estimates are pegged at $1.19 billion and $1.45 billion, suggesting year-over-year increases of 24% and 21.4%, respectively. The consensus estimates for 2025 and 2026 earnings are pegged at 58 cents and 68 cents, indicating gains of 38.1% and 17%, year over year. In contrast, Chipotle, Brinker, and Wingstop's earnings for the current year are expected to witness year-over-year growth of 8%, 114.4%, and 6.6%, respectively.

Average Target Price Suggests Upside

Based on short-term price targets offered by 13 analysts, CAVA's average price target represents an increase of 37% from the last closing price of $82.71. This suggests that investors are optimistic about the company's growth potential and believe its stock price has room to rise.

CAVA’s Solid Same-Restaurant Sales & Traffic

The company posted an impressive 10.8% increase in same-restaurant sales in the first quarter of 2025, driven by a 7.5% rise in guest traffic. Notably, CAVA is experiencing traffic gains across all regions, dayparts, and income groups, with particularly strong momentum among lower-income diners. On a three-year basis, same-store sales have jumped 41.5%, underscoring the brand's growing relevance and customer loyalty.

CAVA’s Aggressive Restaurant Expansion

CAVA continues to scale its footprint, opening 15 net new units in the first quarter of 2025, bringing its total count to 382. The company expects to open 64-68 locations in 2025, slightly above its previous guidance. New restaurants, especially in markets like Indiana, Miami, and Lafayette, LA, are outperforming expectations in sales and margins.

Clear Long-Term Growth Vision

Management remains focused on long-term growth, reaffirming its plan to operate at least 1,000 restaurants by 2032. Expansion into untapped markets such as Detroit and Pittsburgh is central to this strategy.

Loyalty Program Momentum

CAVA's revamped loyalty program is proving to be a powerful customer retention tool. Sales tied to loyalty members have grown significantly, with nearly 8 million members now enrolled. The brand is seeing success with targeted promotions around new menu items, and a tiered reward system is expected to launch later this year to further boost engagement.

Near-Term Headwinds

While CAVA's growth momentum is encouraging, the company continues to face near-term headwinds, including high costs and economic uncertainty. Management is monitoring consumer sentiment, tariffs, and inflation closely and has implemented a modest 1.7% menu price increase at the start of 2025.

CAVA Trades at a Premium

Despite its recent decline, CAVA is currently priced at a premium relative to its industry, with a forward 12-month price-to-sales (P/S) ratio of 7.23, above the industry average. Conversely, other industry players like Chipotle, Brinker, and Wingstop are trading at 5.88X, 1.51X, and 11.41X, respectively.

Conclusion

CAVA is showing encouraging signs of a turnaround, driven by strong guest traffic, expanding loyalty engagement, and restaurant openings that are outperforming expectations. The company continues to execute on its long-term growth strategy, with a clear focus on market expansion, operational efficiency, and maintaining brand relevance through health-forward offerings and digital engagement. While the recent rally in the stock price reflects growing investor optimism, concerns around elevated costs, inflation, and a still-challenging macroeconomic backdrop warrant caution. CAVA's premium valuation suggests much of its growth potential may already be priced in. For existing investors, the improving fundamentals support a hold strategy, but for new buyers, it may be wise to wait for a more attractive entry point as the company navigates near-term headwinds.