It has been about a month since the last earnings report for Cava Group (CAVA). Shares have added about 9.3% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Cava due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for CAVA Group, Inc. before we dive into how investors and analysts have reacted as of late.
CAVA's Q1 Earnings & Revenues Beat Estimates
CAVA delivered first-quarter fiscal 2026 earnings of $0.20 per share, down 9.1% from the year-ago quarter, but beat the Zacks Consensus Estimate of $0.17 by 17.65%. Total revenues rose 32.1% year over year to $0.44 billion and topped the consensus mark of $0.42 billion by 4.49%.
Results reflected a combination of unit growth and healthy demand trends. Same Restaurant Sales increased 9.7% in the quarter, including Guest Traffic growth of 6.8%, supporting a step-up in restaurant volumes.
CAVA Q1 Unit Growth Drives Restaurant Sales Expansion
On the top line, CAVA revenues grew 32.2% year over year to $434.4 million, primarily reflecting contributions from 92 Net New CAVA Restaurant Openings during or subsequent to the first quarter of fiscal 2025. The company ended the quarter with 459 CAVA restaurants, up from 382 a year earlier.
Management also highlighted that new restaurant openings continue to exceed expectations in both top-line and margin performance, with first-quarter new restaurant productivity trending above 100%. That early performance can support continued reinvestment in new markets as the chain scales.
CAVA’s Q1 Restaurant-Level Margin
CAVA’s restaurant-level profit margin was 25.1% in the first quarter, flat year over year, even as the business absorbed incremental wage investments and a higher mix of third-party delivery. The company said leverage from higher sales helped offset those pressures, keeping profitability at the restaurant level stable.
Cost structure details underscore that balance. Food, beverage and packaging costs were 29.1% of CAVA revenues, down 20 basis points versus the prior-year quarter, largely due to a favorable mix. Labor and related costs were 25.7% of revenues, approximately flat year over year, as sales leverage was offset by a 2% investment in team member wages, including the expansion of an Assistant General Manager role.
CAVA Generates Strong Cash Flow in Q1
CAVA paired growth with improved cash generation. Net cash provided by operating activities was $64.1 million for the quarter, up from $38.6 million a year ago. Capital spending remained elevated as the company built out its footprint, with purchases of property and equipment of $48.6 million, resulting in free cash flow of $15.5 million.
Liquidity also remained ample. The company ended the quarter with $295.8 million of cash and cash equivalents and $107.2 million of investments, and it reported access to a $150 million revolving credit facility. Management said this base is expected to support near-term expansion and operating needs.
CAVA Raises FY26 Outlook
Reflecting first-quarter momentum, CAVA raised its full-year fiscal 2026 outlook. The company now expects 75-77 net new restaurant openings, compared with prior guidance of 74-76. Same Restaurant Sales growth is now expected to be 4.5%-6.5%, up from 3.0%-5.0% previously.
Profitability and investment assumptions moved as well. CAVA lifted its CAVA restaurant-level profit margin outlook to 23.7%-24.3% (from 23.7%-24.2%) and raised its pre-opening cost outlook to $22.0-$22.5 million (from $19.5-$20.0 million). Adjusted EBITDA is now expected to be $181-$191 million, up from $176-$184 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 7.71% due to these changes.
VGM Scores
Currently, Cava has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of F on the value side, putting it in the bottom 20% quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Cava has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cava belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Jack In The Box (JACK), has gained 11% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.
Jack In The Box reported revenues of $254.26 million in the last reported quarter, representing a year-over-year change of -24.5%. EPS of $0.76 for the same period compares with $1.20 a year ago.
Jack In The Box is expected to post earnings of $0.90 per share for the current quarter, representing a year-over-year change of -11.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Jack In The Box. Also, the stock has a VGM Score of B.
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This article originally published on Zacks Investment Research (zacks.com).