Company Overview
CAVA Group, Inc. operates as a prominent player within the consumer cyclical sector, specifically functioning in the restaurants industry by owning and operating a chain of restaurants under the CAVA brand across the United States while also supplying dips, spreads, and dressings through grocery store channels. The company's operational scope extends beyond traditional dining experiences to include the provision of walk-the-line, online, and mobile ordering platforms, offering a diversified digital and physical customer engagement model. This enterprise commands a substantial market capitalization of $10.20B and generates annual revenue of $1.18B, supported by a workforce of 13,480 employees. These financial metrics indicate that CAVA Group, Inc. has achieved significant scale and market penetration, establishing itself as a large-cap entity within the competitive quick-service restaurant landscape where capital efficiency and rapid expansion are critical success factors.
Financial Health
The company reported revenue of $1.18B over the trailing twelve months, generating net income of $63.74M and an EBITDA of $133.87M. The substantial gap between the total revenue figure and the net income reveals a cost structure where operating expenses, including cost of goods sold and overhead, consume the majority of top-line growth, leaving a significant portion of earnings before interest and taxes to cover these costs before reaching the bottom line. Free cash flow stands at -$20,631,750, indicating a period of negative cash generation that suggests the company is currently prioritizing capital expenditures and expansion over immediate cash accumulation, thereby limiting short-term financial flexibility for internal reinvestment without external financing. Gross margin is reported at 37.4%, reflecting strong pricing power and efficient supply chain management in its core food service operations. Operating margin sits at 1.4%, which indicates that a large volume of fixed costs and overhead expenses are absorbed from gross profits before reaching operating income. Profit margin is 5.4%, showing that after all expenses including interest and taxes, the company retains a modest percentage of revenue as actual profit. On the balance sheet, total cash holdings of $393.03M are compared against total debt of $466.25M, resulting in a debt-to-equity ratio of 59.80, which characterizes a leveraged balance sheet where liabilities exceed liquid cash reserves. The current ratio of 2.65 indicates robust short-term liquidity, as the company holds more than double the current liabilities in current assets, providing a comfortable buffer for meeting obligations. Return on equity is 8.6% and return on assets is 3.0%, metrics that reveal how management effectiveness in generating returns is moderated by the high level of debt, as the return on assets is significantly lower than the return on equity due to the financial leverage applied to the asset base.
Valuation Assessment
The trailing twelve-month P/E ratio is 162.30, while the forward P/E is 123.75, and the difference between these two figures implies that the market expects earnings to contract significantly in the near future or that current valuation levels are priced on anticipated future profitability improvements rather than current earnings performance. The price-to-book ratio is 13.05, indicating that the market is valuing the company at a substantial premium over its book value, reflecting investor confidence in the brand equity and growth potential despite current earnings volatility. The price-to-sales ratio is 8.65, and the EV/EBITDA is 76.73, suggesting that alternative valuation metrics point to a high multiple environment where investors are willing to pay a steep premium for sales and operating cash flow relative to asset size and earnings power. The 52-week high is $101.50 and the 52-week low is $43.41, and without a specific current share price provided in the facts, the range demonstrates a stock with significant price volatility over the past year. The beta value is 2.18, which means the stock price is expected to be approximately 118% more volatile than the broader market, highlighting the asset's sensitivity to market movements and its classification as a high-beta growth stock.
Growth & Income
Revenue growth year-over-year is 20.9%, whereas earnings growth year-over-year is -94.0%, indicating that earnings are growing significantly slower than revenue, or in this specific instance, declining sharply while top-line sales expand. This divergence implies that the company is facing rising cost pressures or one-time charges that are eroding profitability faster than revenue is increasing. The company does not pay a dividend, as evidenced by a dividend yield of N/A and a payout ratio of 0.0%, which means the firm reinvests all available earnings back into the business rather than distributing cash to shareholders. Consequently, the overall growth and income profile is characterized by aggressive capital deployment for expansion at the expense of current shareholder income distribution, relying entirely on capital appreciation rather than yield for total return.