Cava Stock Jumped After a Blowout Quarter. Is It Still a Buy?

Shares of Cava Group (NYSE: CAVA) initially soared after the Mediterranean fast-casual chain reported fiscal first-quarter results Tuesday afternoon, with the stock opening Wednesday's session at nearly $87. The reaction made sense: revenue jumped 32% year over year, same-restaurant sales reaccelerated to 9.7% from just 0.5% in the prior quarter, and management raised its full-year outlook on nearly every line that matters.

But the bulk of that early surge has since faded. As of this writing, the stock is trading at about $81 -- only modestly above where it closed before Cava's earnings release.

So, with the underlying business clearly accelerating again, is the stock still a buy?

Image source: Getty Images.

A sharp reacceleration

Net revenue in Cava's fiscal first quarter (the period ended April 19, 2026) rose 32.2% year over year to $434.4 million.

The bigger story, however, was same-restaurant sales, which grew 9.7% -- a huge rebound.

Just look at how same-restaurant sales played out over the chain's last five quarters: 10.8% in fiscal Q1 2025, 2.1% in fiscal Q2, 1.9% in fiscal Q3, and a mere 0.5% in fiscal Q4 2025. That final reading even included a 1.4% decline in guest traffic.

Some investors may have feared Cava was on the verge of posting its first negative comparable sales figure since going public. Instead, the chain blew past expectations. The 9.7% growth was driven by a 6.8% rise in guest traffic, with menu prices and product mix accounting for the remaining 2.9%.

It also helps to view that 9.7% comp against what's happening elsewhere in fast casual. Both Sweetgreen and Wingstop recently posted weak comparable sales results.

Cava's systemwide average unit volume now stands at $3 million, and the company ended the quarter with 459 restaurants -- a 20.2% year-over-year increase. The chain opened 20 net new locations during the period, including new market entries in St. Louis and Columbus. And CEO and co-founder Brett Schulman said on the fiscal Q1 earnings call that early performance from the 2026 cohort is "tracking in line with or ahead of the strength of our 2025 class, with first quarter new restaurant productivity trending above 100%."

And profitability was solid. Restaurant-level profit margin came in at 25.1% of revenue, flat with the year-ago quarter despite labor investments and a higher mix of third-party delivery. Adjusted (non-GAAP) earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 37.6% to $61.7 million.

A higher outlook -- and high expectations

Given this business momentum, Cava now expects 2026 same-restaurant sales growth of 4.5% to 6.5%, up from a previous range of 3% to 5%. Adjusted EBITDA guidance was raised to $181 million to $191 million, from $176 million to $184 million. And the company nudged its new restaurant target slightly higher to 75 to 77 net openings, from 74 to 76.

Chief financial officer Tricia Tolivar told investors during the company's fiscal first-quarter earnings call that "our same restaurant sales trends in the second quarter are in line with our overall same restaurant sales in the first quarter."

With this said, the updated outlook still implies a meaningful slowdown for the back half of the year. To get to the midpoint of the new range, comps would need to moderate to roughly the mid-single digits over the balance of 2026.

Additionally, some emerging margin pressures are worth keeping in mind, too. The national launch of pomegranate-glazed salmon is expected to be roughly a 100-basis-point restaurant-level margin headwind through at least the fourth quarter. And layered on top of this are 20 to 40 basis points from elevated energy costs and ongoing wage investments -- factors that could leave restaurant-level margins essentially flat for the year despite the higher sales outlook.

Then there's the valuation. Even after the post-earnings pullback, Cava trades at roughly 150 times earnings and about 130 times forward earnings, with a market capitalization above $9 billion on trailing-12-month revenue of around $1.3 billion.

A price tag like this assumes years of robust comparable sales growth alongside continued operating leverage. In other words, the stock's valuation doesn't leave much room for any future stumbles -- and recent quarters showed how quickly Cava's comps can swing.

Ultimately, Cava's rebound in same-restaurant sales growth is good news for shareholders. But for those considering purchasing shares today, I'd be leery. Too much optimism may already be priced in.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cava Group. The Motley Fool has a disclosure policy.