Cava and e.l.f. Beauty: Two Consumer Stocks, One Better Buy

In this battle, we will weigh the potential of a rising star against a dominant disruptor. Cava Group (NYSE:CAVA) and e.l.f. Beauty (NYSE:ELF) represent two distinct paths for growth in today's market.

Cava is leveraging a Mediterranean health-conscious menu to capture fast-casual market share, while e.l.f. Beauty uses a digital-first approach to lead the cosmetics industry. Both companies have demonstrated an ability to maintain high revenue growth even as they navigate shifting consumer habits. Choosing between them requires a close look at their current efficiency and valuation.

The case for CAVA

Cava Group operates as a Mediterranean fast-casual restaurant brand that offers a variety of customizable bowls, pitas, and salads. The company has established itself as a fast-growing player among retail stocks as it scales its footprint across the United States. Its vertically integrated model includes selling proprietary dips and spreads through grocery stores, allowing the brand to reach guests through both physical locations and digital channels.

In the fiscal year ended Dec. 28, 2025, revenue reached nearly $1.2 billion, reflecting revenue growth of approximately 22.4% compared with the prior fiscal year. This growth is driven by new restaurant openings and consistent demand for its health-focused menu. The company reported net income of approximately $63.7 million for the same period, yielding a net margin of roughly 5.4%. While this is a decrease from the net margin reported in the prior fiscal year, it indicates the business continues to operate profitably as it expands.

The case for e.l.f. Beauty

e.l.f. Beauty is a multi-brand cosmetics company that focuses on providing high-quality products at accessible price points. The company reaches its diverse consumer base through a network of major retailers, including Target (NYSE:TGT), Walmart (NASDAQ:WMT), and Amazon (NASDAQ:AMZN). In addition to its flagship brand, the business manages a growing portfolio that includes e.l.f. SKIN and Naturium, utilizing a digital-first strategy to maintain market relevance.

In the fiscal year ended March 31, 2026, revenue reached approximately $1.6 billion, an increase of roughly 24.6%. Despite this strong top-line performance, the company reported a net income of nearly $26.3 million, resulting in a net margin of approximately 1.6%. This reflects a decrease in net margin compared with the prior fiscal year as the company continues to invest in brand expansion and the integration of new acquisitions.

Risk profile comparison

Cava Group faces significant competitive pressure from national and regional restaurant chains, as well as grocery stores and meal subscription services. The company also navigates operational risks associated with scaling its restaurant footprint, managing site selection, and maintaining its corporate culture during rapid growth. Supply chain dependency on a limited number of distributors carries risks of disruption from weather, macroeconomic conditions, or food safety issues.

e.l.f. Beauty carries risks of high reliance on a small number of major retail partners, such as Target, Walmart, and Amazon, for a large portion of its total sales. Potential global supply chain disruptions could impact its ability to meet consumer demand. The business must also keep pace with rapidly changing consumer preferences and successfully integrate recent acquisitions to sustain its growth trajectory.

Valuation comparison

e.l.f. Beauty appears to be the more conservatively valued option, as it trades at significantly lower multiples of both its future earnings estimates and its recent sales.

Which stock is the better buy?

There's a lot of interest in Cava, as some investors are betting it could have a growth trajectory similar to Chipotle Mexican Grill's. We'll soon see updated numbers when Cava reports its 2026 third-quarter earnings on Nov. 4, but from the second-quarter results, we can see that the company has momentum on its side. It had 17 net new restaurant openings during that quarter, with revenue growth of 31.3% and guest traffic growth of 5.3%.

Typically, as a low-margin business with high operational costs, I tend to shy away from restaurant stocks. That said, in the long term, Cava wins out for me, as Cava expects to expand from 500 locations to 1,000 by 2032. If its restaurant concept continues to prove popular, it may not be finished at that number, as Chipotle, the earlier comparison, has over 4,000 locations. Investing in e.l.f. still has merit, as it is finding success competing against legacy brands through budget-friendly pricing and a strong digital presence. The e.l.f. stock price has also done exceptionally well this year, with shares climbing 48.5% compared to Cava's return of less than 1%. But between the two, for the long term, if Cava gets anywhere close to replicating Chipotle's success, it will be the better growth stock to own.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Cava Group, Chipotle Mexican Grill, Target, and Walmart. The Motley Fool recommends e.l.f. Beauty and recommends the following options: short December 2026 $38 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.