Fast-casual Mediterranean restaurant chain Cava Group cleared estimates for its Q2 late Thursday. CAVA stock spiked to a fresh record high Friday.
Cava reported earnings of 17 cents per share adjusted, beating FactSet views for 13 cents. Revenue leapt 35% to $231.4 million, while analysts expected $219.5 million in sales.
The results marked Cava's first earnings decline in six quarters.
Same-restaurant sales grew 14.4%, slowing from an 18.2% increase last year. Still, same-store sales outpaced views for an 8.2% increase.
CEO Brett Schulman in the release noted that traffic grew 9.5% and the company opened 18 new restaurants during the quarter.
Cava lifted its guidance slightly on the results. The Mediterranean chain now sees same-restaurant sales growth ranging from 8.5% to 9.5% for 2024, from its prior outlook of 4.5% to 6.5% growth. Cava expects adjusted EBITDA to range from $109 million to $114 million. It previously guided adjusted EBITDA at $100 million to $105 million.
The company expects to open 54 to 57 new restaurants, up from its prior plans for 50 to 54. Cava also sees its restaurant-level profit margin ranging from 24.2% to 24.7%. In May, Cava said it expects restaurant profit margins of 23.7% to 24.3%.
Stifel on Monday said it is anticipating another strong quarter of same-restaurant sales gains and new store performance, The Fly reported. The firm's review of customer location data indicates that Cava saw traffic improve sequentially from Q1, and believes its sales momentum is sustainable. Stifel expects Q2 results to show evidence of the "organic flywheel effect," which is created when a relevant brand that offers cravable products builds on consumer awareness through unit expansion.
The firm lifted its price target on CAVA stock to 110 from 90 and maintained a buy rating on the shares.
CAVA Stock
CAVA stock vaulted nearly 20% Friday and closed at a new record high of 122. Shares closed down 0.9% Thursday, just below Wednesday's all-time high of 102.90.
Shares are well extended above a buy zone for a cup base after breaking out above the 98.69 buy point on Aug. 16.
The current buy zone, which extends 5% beyond the buy point, stretches to 103.62.
Cava Group leads the Retail-Restaurants Group, according to IBD Stock Checkup.
CAVA stock has about 184% so far this year.
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