Sweetgreen late Wednesday joined Cava with disappointing earnings and light guidance. But Sweetgreen stock reversed higher off multimonth lows on Thursday while Cava stock extended its losing streak to a seventh day.
Late Wednesday, Sweetgreen delivered a larger-than-feared loss for the fourth quarter. Late Tuesday, Cava missed lofty Q4 earnings expectations.
Cava Earnings And Outlook
For Q4, Cava reported earnings of five cents per share late Tuesday, more than doubling from a year ago but falling short of estimates. Revenue grew 28% to $227.4 million, with same-restaurant sales up 21.2%, with both outpacing views.
Analysts were expecting the Mediterranean fast-casual restaurant chain to more than triple earnings to seven cents per share on revenue of $223.3 million, with same-store sales up 17%, according to FactSet.
During Q4, Cava reported 15 net new restaurant openings, bringing total Cava restaurants to 367 locations, an 18.8% increase.
Over the full year, Cava earnings nearly quadrupled to 42 cents a share.
For 2025, Cava on Tuesday guided adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $150 million-$157 million. Analysts were expecting $165.2 million for the full year, FactSet shows.
Q4 Cava Earnings Report Capped A 'Stellar Year'
The Q4 Cava earnings report capped a "stellar year" for the restaurant chain, though 2025 profit guidance came in "slightly shy on growth-oriented investments," said William Blair analyst Sharon Zackfia. The analyst reiterated an outperform rating on Cava stock on Wednesday.
"We anticipate adjusted EBITDA will grow more roughly 55% over the next two years on a 50%-plus increase in sales," the analyst wrote in a note to clients, "with ongoing potential for upward estimate revisions on strong business momentum."
Longer term, Zackfia said she sees "the potential for Cava to generate more than $2.5 billion in revenue and roughly $400 million of adjusted EBITDA by 2032 at roughly 1,000 locations." But she highlighted competition and inflation among the risk factors.
Late Wednesday, Sweetgreen delivered an earnings miss. The Cava rival lost 25 cents a share, wider by a penny vs. a year ago. Revenue rose 5% to $160.9 million, with same-store sales up 4%. Analysts had projected a narrower 21-cent loss per share on revenue of $162 million, with same-store sales up 5.9%.
For 2025, Sweetgreen guided $760 million-$780 million in sales, short of estimates for $793.1 million. Analysts now expect $768 million, according to FactSet.
Cava, Sweetgreen Stocks Slide
On Thursday, Cava stock lost 3.5% in intraday stock market action. Shares slumped for a seventh consecutive session to hit a six-month low.
Sweetgreen stock jumped almost 5% on Thursday after inititally hitting its worst levels since May 2024.
Both Cava and Sweetgreen shares remain well below their 50-day and 200-day moving averages after slumping into their Q4 earnings reports.
Year to date, Cava stock is now down around 15%. It has lost more than 40% from the November peak of 172.43, which was marked by a fast-fading spike following Q3 earnings.
However, Cava shares have nearly doubled from a cup-with-handle breakout last February, the MarketSurge chart shows.
Cava has a 21-day average true range of 5.15%. Sweetgreen shows an ATR of 6.53%.
In the current, unpredictable market, IBD suggests stocks with ATRs of 3 or below.
Jack In The Box jumped nearly 12% on Wednesday after a quarterly earnings beat. The company also said Tuesday that it is reducing capital expenditures and share repurchases, which should improve free cash flow.
Mixed Outlook For Restaurant Retail Stocks
The restaurant retail outlook continues to be mixed. Investors seem to be worried about a sales slowdown after earnings reports in February from fast-casual peers including Chipotle Mexican Grill and Wingstop.
But Brinker International, perhaps the leading restaurant stock in recent months, raised its outlook on Jan. 29. Sales are soaring as diners return to Chili's restaurants. Brinker stock extended a huge run following earnings, but have tumbled back. It's now fighting to hold its 50-day line.
And on Tuesday, Domino's Pizza rose solidly after coming well off Monday's lows following an earnings miss. The fast-food chain vowed to keep offering deals as inflation-weary customers cut back on dining out. But DPZ stock has been rangebound for several months, if not years.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
