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CAVA Stock Before Q2 Earnings: Should You Buy, Sell or Hold?

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Key Takeaways

  • CAVA is set to report 2Q25 results on Aug. 12 after market close.
  • Revenues are projected to rise 22.7%, while EPS is expected to drop 23.5% y/y.
  • Menu innovation, new markets and loyalty growth may be offset by rising costs and high valuation.

CAVA Group, Inc. (CAVA - Free Report) is slated to release second-quarter 2025 results on Aug. 12, after the closing bell.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 57.1%. CAVA surpassed earnings estimates in three of the trailing four quarters and missed once. The average surprise in this period is 26.9%, as shown in the chart below.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

CAVA’s Q2 Estimate Revisions

The Zacks Consensus Estimate for second-quarter earnings per share (EPS) has been unchanged at 13 cents in the past 7 days. The projected figure indicates a decline of 23.5% from the year-ago reported EPS of 17 cents. The consensus mark for revenues is pegged at $286.6 million, implying 22.7% year-over-year growth.

What the Zacks Model Unveils for CAVA

Our proven model does not conclusively predict an earnings beat for CAVA this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

CAVA’s Earnings ESP: CAVA currently has an Earnings ESP of +1.89%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank of CAVA: The company carries a Zacks Rank #4 (Sell) at present.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Influencing CAVA’s Q2 Performance

The company’s top line in second-quarter 2025 is likely to have been aided by strong same-restaurant sales trends, underpinned by positive traffic, which remains a key contributor, with premium menu attachments such as steak and pita chips adding to average check growth. 

The company’s marketing and product innovation efforts, including seasonal campaigns like “Spice World” and new chef-curated bowls, are designed to drive customer engagement and repeat visits. Expansion into new markets such as Indiana, Detroit and Pittsburgh, along with a steady cadence of unit openings, is widening its footprint and customer base.

The company is likely to have benefited from the reimagined loyalty program, now approaching 8 million members. Operational enhancements, including labor deployment models and Connected Kitchen technology, are improving throughput and service consistency, likely supporting higher guest satisfaction and traffic.

The consensus estimate for same-restaurant sales is pegged at 5.9%. CAVA’s restaurant sales are pegged at $284 million, implying 22.9% year-over-year growth.

On the margin side, elevated food, beverage, and packaging costs, primarily from steak, have pressured restaurant-level profitability. Continued investment in team member wages and benefits, while strategic for retention and service quality, adds to labor expenses. Pre-opening costs are likely to have also risen due to higher-rent geographies and the timing of project launches. 

Moreover, the company has been maintaining a measured approach to menu price increases despite inflationary pressures, limiting the extent to which prices can offset cost headwinds. Spending to enhance restaurant spaces and technology infrastructure, while aimed at long-term gains, adds near-term expense pressure.

Price Performance & Valuation of CAVA

The CAVA stock has declined 1.6% over the past year, underperforming its industry peers and the broader market. In the same time frame, shares of other industry players like Domino’s Pizza, Inc. (DPZ - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) and Restaurant Brands International Inc. (QSR - Free Report) have gained 0.9%, declined 23.2% and 7.8%, respectively. 

Price Performance

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Analysts have expressed concerns that CAVA's stock is overvalued. The company is currently valued at a premium compared with its industry on a forward 12-month P/S basis. Its forward 12-month price-to-sales ratio stands at 7.63, significantly higher than the industry and the S&P 500's 5.21.

P/S (F12M)

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Investment Thoughts for CAVA

CAVA’s upcoming second-quarter 2025 report faces a mix of growth momentum and cost pressures, but the risk-reward setup looks unfavorable ahead of earnings. The brand continues to expand its footprint, drive traffic through menu innovation, and strengthen customer engagement via its loyalty program. However, these positives are being offset by rising input costs, higher labor expenses, and elevated pre-opening and infrastructure investments that may weigh on margins.

Coupled with a cautious pricing approach in an inflationary environment and concerns about its premium valuation compared with peers, the stock’s current positioning leaves little room for disappointment. Given these factors, investors may be better off avoiding CAVA in the near term until the earnings outlook becomes clearer and valuation risks ease.

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