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Money

Cava Shares Surge on Upbeat Outlook. Can the Inventory’s Momentum Proceed?

Madisony
Last updated: February 28, 2026 6:38 pm
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Cava Shares Surge on Upbeat Outlook. Can the Inventory’s Momentum Proceed?
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Shares of Cava Group (NYSE: CAVA) surged after the Mediterranean-themed restaurant operator issued upbeat steerage with its fourth-quarter earnings report. The inventory is up extra about 45% 12 months up to now however nonetheless down about 15% over the previous 12 months.

Let’s dig into the corporate’s newest outcomes and prospects to see if the inventory’s momentum can proceed.

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2025 was a tough 12 months for Cava inventory, with its shares getting almost reduce in half. The most important cause for this was that its same-store gross sales progress slowed dramatically beginning in Q2. Nonetheless, that was largely because of the lapping of the introduction of its extremely fashionable grilled steak choice in 2024.

With these powerful comparisons now behind the corporate, it forecasted 3% to five% comparable-restaurant gross sales progress for 2026. That is a pleasant bounce in comparison with the final three quarters of 2025, which ended with it solely reporting a 0.5% enhance in This fall.

Total income for This fall climbed 21% 12 months over 12 months to $272.8 million. It opened 24 new eating places within the quarter, bringing its whole to 439 areas, an almost 20% enhance in comparison with a 12 months in the past.

After getting into a couple of new Midwest markets in 2025, the corporate continues to increase within the area, with deliberate openings in Cincinnati, St. Louis, Columbus, and Minneapolis in 2026. Total, it’s trying to open between 74 and 76 new areas in fiscal 2026. Its aim stays to achieve not less than 1,000 eating places by 2032.

Its restaurant-level margins (RLMs) got here in at 21.4% within the quarter, down from 22.4% a 12 months in the past, and had been 24.4% for the complete 12 months. RLMs measure how worthwhile a series’s particular person eating places are earlier than company prices. It expects a 2026 RLM of between 23.7% and 24.2%.

On the profitability entrance, Cava’s adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) rose by 3% 12 months over 12 months to $25.8 million. The corporate additionally generated $184.8 million in working money stream for the 12 months and free money stream of $26.1 million.

Chart of a stock going up with the year 2026 over part of the chart.
Picture supply: Getty Photographs.

Cava has strong common unit volumes (AUVs) of almost $3 million with robust RLMs, because it makes use of an analogous technique to Chipotle, with minimal substances that can be utilized in a mess of combos. In the meantime, with fewer than 450 areas, it has probably the greatest growth tales within the restaurant trade, because it strikes into new markets and infills current ones.

Given the growth alternative nonetheless in entrance of it, Cava is an fascinating progress story. Nonetheless, after this surge, I believe the inventory has gotten approach forward of itself. It has a market cap of $9.8 billion and 439 areas. That is valuing every of its areas, which common just below $3 million in yearly gross sales, at $22.3 million per restaurant location. That is approach too excessive.

Before you purchase inventory in Cava Group, take into account this:

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*Inventory Advisor returns as of February 28, 2026.

Geoffrey Seiler has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Cava Group and Chipotle Mexican Grill. The Motley Idiot recommends the next choices: quick March 2026 $42.50 calls on Chipotle Mexican Grill. The Motley Idiot has a disclosure coverage.

Cava Shares Surge on Upbeat Outlook. Can the Inventory’s Momentum Proceed? was initially printed by The Motley Idiot

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