Cava (CAVA +0.55%) stock has been a huge winner this year. The Mediterranean fast-casual restaurant chain's share price has risen roughly 52% so far in 2026 -- absolutely crushing the S&P 500's total return level of 6%.
Cava's blockbuster valuation gains have been powered by strong quarterly results and guidance for robust expansion initiatives. Can the stock keep roaring higher, or has its valuation become too stretched for the stock to be a strong buy at current levels?
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Cava has been on a hot streak
Cava delivered its last quarterly report on Feb. 24, posting sales and earnings for the first quarter that beat Wall Street's expectations. The company posted non-GAAP (adjusted) earnings per share of $0.04 on sales of $272.8 million, beating the average analyst estimate's call for an adjusted per-share profit of $0.03 on revenue of $268.4 million.
The company opened 24 net new restaurants in the period and recorded same-store sales growth of roughly 0.5%. Growth along those lines helped push overall revenue up roughly 21% year over year in the business' last quarter.
Now, Cava is on the verge of another big test. The company is scheduled to release its first-quarter earnings results after the market closes on May 19 -- and expectations are running high.
With its last quarterly update, management said that the company expected to open between 74 and 76 net new restaurant locations this year. The company also guided for same-store sales growth to be between 3% and 5%, and for a restaurant-level profit margin between 23.7% and 24.2%.
NYSE: CAVA
Key Data Points
Can Cava keep crushing the market?
With a market capitalization of roughly $10.4 billion, Cava is valued at roughly 7.1 times this year's expected sales and 168.4 times this year's expected earnings. The business is recording margins that paint a promising picture if its sales base continues to expand at healthy rates, but the fast-casual space is highly competitive -- and market dynamics are famously fickle.
Cava's Mediterranean-themed food offerings appear to be resonating with consumers, but the company's growth outlook remains highly speculative. Growth could become significantly more difficult to deliver as the company scales up, and the overall operating backdrop for the fast-casual restaurant space looks challenging right now.
While Cava is guiding for same-store sales growth between 3% and 5% this quarter with the benefit of pricing increases, there are signs that people have generally been becoming more cost-conscious in the restaurant space. New store openings should have a substantially positive effect on overall sales performance, but same-store sales growth coming in at just 0.5% last quarter raises some significant questions.
With Cava's midpoint guidance calling for roughly 75 new restaurants to be opened this year, the company is far from feeling the effects of market saturation and self-cannibalization when it comes to same-store sales performance. While the company's targets for new store openings suggest solid expansion momentum, I think the stock looks too risky to get very excited about right now. The fast-casual restaurant industry is facing some significant headwinds, and Cava still has a lot of proving to do when it comes to its long-term expansion strategies.
