It's been a rough start to 2025 for restaurant chains Cava Group (CAVA 1.41%) and Wingstop (WING +0.47%), with both stocks down around 24% and 21%, respectively (as of March 31).
Losing that much value in a few months isn't ideal. But if there's any silver lining, it's that both stocks are now much cheaper than they were at the start of the year and give investors a much better price point to either start a stake or increase their current stake.
However, which is cheaper between the two? Let's take a look. Viewing their price-to-sales (P/S) ratios, Wingstop seems to be the cheaper option, although the difference between them is very minimal.
CAVA PS Ratio data by YCharts.
Why the P/S ratio is a good metric to use
A company's P/S ratio tells you how much you're paying for each $1 of its revenue. The higher the P/S ratio, the more expensive a stock is considered to be when compared to similar companies.
NYSE: CAVA
Key Data Points
There are a handful of metrics that can give you an idea of how "cheap" or "expensive" a stock is, but the P/S ratio is good for growth stocks like Cava Group and Wingstop because you can compare valuations when profits are minimal or inconsistent.
NASDAQ: WING
Key Data Points
The price-to-earnings (P/E) ratio is also commonly used to determine valuation, but it could be a little misleading for a company like Cava Group, because earnings are low while the company is reinvesting heavily and focusing on expanding rapidly. For now, it's better to stick with the P/S ratio in comparing these two stocks.
