CAVA Stock Post-Q3 Triumph: A Growth Story Worth Investing In?

CAVA Group, Inc. CAVA reported robust third-quarter 2024 results on Nov. 13. Its growing dominance in the Mediterranean dining space aided the third-quarter performance.The company has positioned itself as a leader in this emerging cuisine category, leveraging its unique value proposition to resonate with a broad audience. This momentum reflects CAVA's ability to redefine cultural dining trends and establish Mediterranean cuisine as a major player in the restaurant industry.Major Takeaways From Q3 EarningsEarnings & Revenues Beat Estimates: The company reported third-quarter 2024 earnings per share of 15 cents, beating the Zacks Consensus Estimate of 11 cents. In the prior-year quarter, it had reported adjusted earnings of 6 cents. CAVA’s revenues were $243.8 million, surpassing the consensus estimate of $235 million and increasing 38.9% year over year.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Traffic & Comps Rise in Q3: The company’s results were aided by robust year-over-year traffic and same-restaurant sales growth. In third-quarter 2024, same-restaurant sales increased 18.1%, including guest traffic growth of 12.9%, and a 5.2% jump in menu prices and product mix.Unit Expansion Solid: CAVA added 11 net new restaurants in the quarter, bringing the total to 352, marking a 21.4% year-over-year increase. The company continues to see strong performance from its new restaurant class, boosting confidence in its scalability.Guidance for 2024 Raised: Following the robust third-quarter 2024 results, the company raised its guidance for the year. It expects 56-58 net new restaurant openings, up from the prior mentioned 54-57. The company anticipates CAVA same-restaurant sales growth of 12-13%, up from the earlier stated 8.5-9.5%. The restaurant-level profit margin is expected between 24.5% and 25.0% compared with the previously mentioned 24.2-24.7%.Other Factors Aiding CAVAThe company has been benefiting from menu innovation. The introduction of the latest offerings like Garlic Ranch pita chips and the national rollout of steak has been well-received, driving incremental sales and brand engagement.Garlic Ranch pita chips have become a social media sensation, amassing more than 12 million impressions across various platforms and generating an additional 347 million earned media impressions. Additionally, the nationwide launch of its steak offering more than four months ago continues to demonstrate strong engagement. These initiatives have significantly bolstered brand awareness, which has increased 8 percentage points since the IPO and continues growing with each product launch.CAVA is leveraging AI-driven kitchen technologies to improve ingredient management, order accuracy and operational efficiency. Early tests in select locations show promising results. The newly launched loyalty rewards program has boosted customer engagement, with loyalty sales as a percentage of revenues growing 200 basis points.The company announced plans to expand into new markets, such as South Florida and additional Midwest locations, with its 2025 pipeline reflecting at least 17% unit growth. The brand continues to capitalize on the rising popularity of Mediterranean cuisine, emphasizing its unique value proposition of health, bold flavors and genuine hospitality.CAVA’s Price Performance & ValuationThe CAVA stock has surged 80.6% over the past six months, significantly outperforming its industry peers and the broader market. The industry has rallied 8% and the S&P 500 rose 10.5%. CAVA's strong momentum shows its continued ability to fire on all cylinders.CAVA has outpaced industry players like Chipotle Mexican Grill, Inc.’s CMG 7.4% dip, Domino's Pizza, Inc.’s DPZ 14.4% decline and Restaurant Brands International Inc.’s QSR 0.7% gain in the past six months.Stock Price Performance Image Source: Zacks Investment Research CAVA is currently valued at a premium compared with its industry on a forward 12-month P/S basis. The company’s forward 12-month price-to-sales ratio stands at 13.81, significantly higher than the industry’s 3.98 and the S&P 500's 5.17.P/S (F12M) Image Source: Zacks Investment Research Estimate Revision Favoring the StockReflecting the positive sentiment around CAVA, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 7 days, analysts have increased their estimates for the current and next fiscal years by 11.1% to 50 cents and 13% to 61 cents, indicating year-over-year growth rates of 138.1% and 22.9%, respectively. Image Source: Zacks Investment Research ConclusionCAVA's impressive third-quarter 2024 performance highlights its strong positioning in the growing Mediterranean dining space. The company's ability to innovate with menu offerings, expand into new markets and leverage technology for operational efficiency underscores its growth potential. With a scalable model and increasing popularity for its cuisine, the Zacks Rank #2 (Buy) company is well-positioned for sustained momentum, making it an attractive investment opportunity for those seeking exposure to a dynamic and expanding segment of the restaurant industry.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report Domino's Pizza Inc (DPZ): Free Stock Analysis Report Restaurant Brands International Inc. (QSR): Free Stock Analysis Report CAVA Group, Inc. (CAVA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks