Mediterranean fast-casual food chain Cava Group (CAVA) reports Q1 earnings late Tuesday. CAVA stock hit a fresh record high ahead of results, with the hot IPO nearly doubling in 2024.

X

Stifel on Tuesday hiked its price target on CAVA stock to 90 from 66 and maintained a buy rating on shares, The Fly reported. The firm forecasts the report will “provide evidence of the organic flywheel effect,” which occurs when incremental improvements accumulate momentum for significant growth.

Meanwhile, Cava is a relevant brand that offers craveable products, which is creating growing consumer awareness and usage, the firm wrote. Stifel expects Cava to report “another strong quarter” of same-restaurant sales growth.

Same-store sales will be a key metric this quarter. Analysts will be watching for further signs of a sales slowdown as budget-strapped customers cut back on dining out. U.S. fast food traffic fell 3.5% in the first three months of 2024 compared to last year, the Wall Street Journal reported citing Revenue Management Solutions data. And Cava raised its menu prices by about 3% nationwide in January to offset ingredient inflation, according to the WSJ.

During an investor conference in March, CAVA CFO Tricia Tolivar said there might be “some pullback” from customers this year due to higher prices, which they did not experience in 2023. Still, CAVA will likely benefit from customers trading down from full-service restaurants, Tolivar said.

Chipotle (CMG), McDonald’s (MCD) and Wendy’s (WEN) previously reported that same-store sales growth slowed in Q1. Starbucks (SBUX) at the end of April said Q2 comparable transactions fell 7% in North America.

But Cava is among a decent handful of restaurant stocks that has bucked the trend, along with Wingstop (WING), Texas Roadhouse (TXRH), Sweetgreen (SG) and Chipotle Mexican Grill (CMG).

Cava Earnings

FactSet expects Cava (CAVA) earnings to improve to 5 cents per share from a loss of 2 cents per share last year. Revenue is seen jumping nearly 21% to $246 million.

However, same-store sales growth is expected to slow for the fourth consecutive quarter, climbing just 1.6%, according to FactSet estimates. CAVA reported 11.4% same-restaurant sales growth in Q4.

Continued store openings will likely be a big revenue driver.

The Mediterranean chain averaged a 152.7% increase in earnings the last three quarters, although growth slowed over the last two periods.

CAVA Stock Performance

CAVA stock edged up 0.7% to 83.50 Tuesday afternoon, hitting a fresh all-time high of 86.40 intraday.

Shares are extended after clearing a trendline entry in late April.

CAVA stock has rallied more than 94% in 2024.

Cava is on IBD Leaderboard.

You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison

YOU MAY ALSO LIKE:

Leaders & Success: Cava CEO Brett Schulman Bets On Mediterranean Diet

Best Growth Stocks To Buy And Watch: See Updates To IBD Stock Lists

Looking For The Next Big Stock Market Winners? Start With These 3 Steps

Learn How To Time The Market With IBD’s ETF Market Strategy

Join IBD Live And Learn Top Chart Reading And Trading Techniques From Pros