Today's surge in Cava Group's stock price.
Today's surge in Cava Group's stock price.
Shares for the fast-casual Mediterranean eatery chain, Cava Group (dropping 0.13%), saw a spike in activity today, following its disclosure of better-than-anticipated results in its third-quarter earnings report, released on Tuesday evening.
This upward trend started last year as Cava's Chipotle-inspired concept has proved popular with customers. The stock soared by 11% at 10:30 a.m. ET.
Cava's triumph continues
In terms of sales, Cava experienced another remarkable increase with same-store sales soaring a staggering 18%, propelled by a customer footfall surge of 13%. This translated into a 39% revenue boost to reach $243.8 million, surpassing the projected figure of $233.6 million.
Average sales per unit rose from $2.6 million to $2.8 million, indicating a growth in business for each individual location and a restaurant-level net profit margin of 25.6%, nearing that of Chipotle and other top-tier restaurant operators.
Contributing to the profitability, net income nearly trebled from $6.8 million to $18 million, and earnings per share under generally accepted accounting principles (GAAP) improved from $0.06 to $0.15, surpassing the estimated $0.11.
CEO Brett Schulman remarked: "Our third-quarter figures reflect the robustness of our Mediterranean category-leading brand and the widespread appeal of our distinct value proposition, materializing into what is swiftly becoming the forthcoming key culinary category."
Cava's future prospects
Unsurprisingly, Cava increased its projections for the full-year, anticipating a 12%-13% boost in same-store sales, upgraded from an earlier estimate of 8.5%-9.5%. It also forecasts an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $121 million-$126 million, a slight increase from its previous range of $109 million-$114 million. It also slightly adjusted its store opening plans, now aiming to open up to 58 locations.
Cava is expanding at a rapid pace, and its sales continue to skyrocket. Although the stock might appear costly, this trend of growth seems to be sustaining. If Cava's growth trajectory remains unchanged, the stock could reach even greater heights.
In light of Cava's impressive financial performance, investors might consider diversifying their portfolios by investing more in the company's shares. With the significant increase in same-store sales and net income, Cava's finance sector shows promising growth potential.