Should you buy Cava stock? (April 2024)

Cava stock analysis. Ticker: $CAVA

Restaurant business Cava joined the public markets last June and many investors think it could be the next Chipotle. At the current price, Cava has a market cap of 7 billion dollars. It’s got 332 million of cash on its balance sheet and no debt so the enterprise value is 6.7 billion.

CAVA opened 72 restaurants last year and grew revenue 29% to 729 million. Net income was 13 million and adjusted ebitda was 74 million. So Cava is now valued at an eye popping 9 times revenue, 500 times earnings and 90 times ebitda.

That sounds like a high valuation. But Cava’s Mediterranean fast casual dining is booming. And Cava looks very similar to an early Chipotle, which has been one of the best performing stocks of the last 20 years.

Back in 2002, Chipotle operated 222 restaurants, it now has over 3000 with annual revenues of almost 10 billion. Cava currently operates 309 restaurants and plans to get to 1000 by 2032.

Back then, Chipotle’s average restaurant, adjusted for inflation, generated roughly 2.1 million dollars in revenue, which is a little less than Cava’s current average. The companies share a similar assembly-line operation and same-restaurant sales growth for the two firms are also very similar.

However, the comparison with Chipotle also highlights a major problem for the stock. It’s taken Chipotle 20 years of impressive execution to get to where it is now which is an 80 billion dollar market cap.

If Cava does become the next Chipotle, and achieves the same valuation, CAVA stock would only return about 12% annualized over that stretch. Those are obviously good returns — but they require that Cava becomes one of the best restaurant chains in the world.

#cavastock #investing #stocks #3mb #stockstosell

[Hourstone]

Nice that you're analytical and not getting carried away by the price momentum. Momentum hugging is everywhere, analysis is rare, so I appreciate these videos you're putting out.

[dougtrvl]

I’ll see you at 100 💯 dollars 💵 in less than 2 years !

[TheFoodFund]

Great analysis! Totally agree! CAVA looks like it will be a good restaurant company but it is no Chipotle! I cover CAVA on my restaurant stocks Youtube channel and agree valuation is a huge drawback! Thanks for sharing!

[youngpower]

Was this satire? If so, hilarious. If not, a sad sad miss.

[frozzenluke]

Please MSCI after this breakdown, please please please

[magic]

This stock is BS. Each store has a value of 32M? What! Bought a few shares to start and then I would buy in increments. Stock has done nothing but go down. I ate there for the first time today. It is like Subway Mediterranean.. Nothing friendly about the staff. The girl serving seemed annoyed. The Side dishes on the website look like a nice size portion/container but, what you actually get is a small dixie cup size portion. Had the Steak Mezze Salad. Not much of a steak portion, lousy quality, very small scoop of hummus and the rest in the bowl was just a soggy mix of ingredients. Had the Lavender Blueberry drink sweet sugary drink. All for 20 plus dollars. For what I got it should have not been more than 14.00 at most. I sold my shares as soon as I got home, took a tiny loss and bought something that would give me back the loss within a day or two. I will predict that the sizzle of this place will fizzle soon.

[keithb]

Today is CAVA just reported second quarter results that beat estimates across revenue, earnings, and same-store sales. Net sales jumped 35.2% year over year to $233.5 million, compared to expectations of $219 million. Adjusted earnings per share came in at $0.17, versus the $0.13 expected.... So, whatever you do, DO NOT LISTEN TO THIS GUY! He doesn't know anything.