Cava Continues to Prove It's the New Chipotle

With markets so high, it's particularly tough these days to entrust capital to high-valuation stocks. In Cava's (NYSE: CAVA) case, the Mediterranean food chain might be the exception. The stock is up over 26% in the last five days, thanks to a stellar second-quarter earnings report. I see this chain as the new Chipotle (NYSE: CMG) with great growth potential.

Let's start with the revenue growth. This is, after all, what everyone is looking for in a growth-focused company like Cava. The company managed to report revenue growth of 35.2% year over year in the second quarter to $231.4 million. How often do you see that level of growth? Same-restaurant sales increased 14.4%, while restaurant-level profit improved 37.3% year over year. In all, earnings of $0.17 per share outpaced expectations of $0.13.

Cava also increased its guidance for fiscal 2024. Same-restaurant sales are now expected to grow 8.5% to 9.5% compared to previous guidance of 4.5% to 6.5%. One of the big announcements here has been the introduction of grilled steak to menus, which the company announced has been outperforming expectations.

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Source Fool.com