CAVA Group, Inc. Just Recorded A 198% EPS Beat: Here's What Analysts Are Forecasting Next

As you might know, CAVA Group, Inc. (NYSE:CAVA) just kicked off its latest first-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 5.5% to hit US$259m. CAVA Group also reported a statutory profit of US$0.12, which was an impressive 198% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for CAVA Group

After the latest results, the nine analysts covering CAVA Group are now predicting revenues of US$897.9m in 2024. If met, this would reflect a decent 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 33% to US$0.34. Before this earnings report, the analysts had been forecasting revenues of US$874.7m and earnings per share (EPS) of US$0.25 in 2024. So it seems there's been a definite increase in optimism about CAVA Group's future following the latest results, with a very substantial lift in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 23% to US$83.30per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic CAVA Group analyst has a price target of US$94.00 per share, while the most pessimistic values it at US$72.00. This is a very narrow spread of estimates, implying either that CAVA Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that CAVA Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 20% growth on an annualised basis. This is compared to a historical growth rate of 29% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.8% annually. Even after the forecast slowdown in growth, it seems obvious that CAVA Group is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CAVA Group's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on CAVA Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple CAVA Group analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for CAVA Group that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.