Earnings Beat: CAVA Group, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Explore CAVA Group's Fair Values from the Community and select yours

Shareholders in CAVA Group, Inc. (NYSE:CAVA) had a terrible week, as shares crashed 22% to US$68.93 in the week since its latest quarterly results. Revenues were US$281m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.16 were also better than expected, beating analyst predictions by 20%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Taking into account the latest results, the current consensus from CAVA Group's 15 analysts is for revenues of US$1.18b in 2025. This would reflect a meaningful 8.9% increase on its revenue over the past 12 months. Statutory earnings per share are expected to crater 54% to US$0.56 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.19b and earnings per share (EPS) of US$0.57 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

See our latest analysis for CAVA Group

The consensus price target fell 16% to US$92.21, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. 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. There are some variant perceptions on CAVA Group, with the most bullish analyst valuing it at US$125 and the most bearish at US$72.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that CAVA Group's revenue growth is expected to slow, with the forecast 19% annualised growth rate until the end of 2025 being well below the historical 26% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.9% 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 most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of CAVA Group's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple CAVA Group analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for CAVA Group (1 can't be ignored!) that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.