Cava (CAVA 0.19%) shares hit the public markets in 2023, and the fast-casual restaurant chain soared shortly after its debut, posting blistering growth on the top and bottom lines.
However, the last year has been more difficult for the Mediterranean concept as the fast-casual stock has wallowed amid a broader downturn in restaurant spending and slower growth at Cava.
The fourth-quarter earnings report, which came out after hours on Wednesday, seemed to give the stock the shot in the arm investors were looking for as the fast-casual chain beat estimates on the top and bottom lines, and gave solid guidance for 2026.
Image source: Cava.
Is the worst over for Cava?
In an environment where consumer spending is still weak, Cava delivered comparable sales growth of 0.5%, outperforming Chipotle, and revenue jumped 21% to $275 million, ahead of estimates at $268.4 million.
Cava's growth was primarily driven by new restaurant openings, which was expected as Cava finished the year with 439 restaurants and sees room to grow to more than 1,000 locations by 2032.
Bottom-line growth was slower, reflecting weak comparable-sales growth. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from $25.1 million to $25.8 million, and adjusted earnings per share fell from $0.05 to $0.04, but still beat the consensus at $0.03.
The company topped $1 billion in revenue for the first time, reaching $1.17 billion in revenue for 2025, and expects comparable sales of 3%-5% in 2026.
It also forecast 74-76 new restaurant openings this year, and adjusted EBITDA of $176 million-$184 million, up from $152.8 million in 2025.
NYSE: CAVA
Key Data Points
Is Cava a buy?
After today's surge in Cava stock, it remains expensive at a price-to-earnings ratio above 100.
However, the biggest question facing the stock is what its long-term potential looks like. Cava generates Chipotle-like restaurant-level profit margin, at 24.4% in 2025, and average restaurant volumes, at $2.9 million.
Based on those metrics, Cava's restaurants are both popular and handsomely profitable, and with less than 500 locations around the country, there's still a long runway for growth.
Cava may not grow to be as big as Chipotle, but it doesn't need to do that to be a winner for investors. If it can deliver positive comparable sales and maintain its pace of expansion, the stock is likely to have more days like this one.
