CAVA vs. Hershey: Which Stock Is a Better Buy for 2027?

Choosing between high-growth expansion and established market dominance is a classic investor dilemma. CAVA Group (NYSE:CAVA) and Hershey (NYSE:HSY) offer two very different ways to play the changing consumer landscape heading into 2027.

CAVA focuses on the rapid expansion of its Mediterranean restaurant brand, while Hershey maintains its position as a global leader in the snacking and confection industry. Comparing these two companies helps you decide whether to prioritize aggressive top-line growth or the safety of a defensive staple.

The case for CAVA

CAVA Group operates a Mediterranean fast-casual restaurant brand that offers bowls, pitas, and salads. Its direct-to-consumer model primarily focuses on its physical locations across 29 states, where it serves a diverse guest base. The company also sells its branded dips and dressings through grocery channels and maintains relationships with over 50 growers and ranchers for its ingredients.

In FY 2025, revenue reached nearly $1.2 billion, which was a growth of approximately 22.4% over the prior fiscal year. The company reported a net income of roughly $63.7 million, showing it is currently profitable as it expands. However, the net margin decreased to approximately 5.4%, as the business invested heavily in its infrastructure and new store openings.

As of its December 2025 balance sheet, CAVA carries a debt-to-equity ratio of approximately 0.6x. This metric compares total debt to shareholder equity, and a lower number typically indicates a more stable financial structure. The current ratio, which measures assets available to cover short-term debts, is roughly 2.7x. Free cash flow, or cash from operations minus capital expenditures, was nearly $26.1 million in FY 2025.

The case for Hershey

The Hershey Company is a giant in the snacking industry, known for its chocolate, confectionery, and salty snack brands. In its latest annual report filed for FY 2025, the company noted that it sells products in approximately 65 countries. It distributes these goods through wholesale distributors and retail stocks like Walmart (NASDAQ:WMT), though one customer, McLane Company, Inc., accounts for roughly 27% of its sales, and customer concentration like this adds a layer of risk to the business.

In FY 2025, Hershey generated nearly $11.7 billion in revenue, showing a growth rate of approximately 4.4%. The company reported a net income of close to $883.3 million for the year. While revenue increased, the net margin dropped to roughly 7.6% for the period, which is a significant change from the much higher margins the company achieved in previous years.

As of its December 2025 balance sheet, Hershey has a debt-to-equity ratio of approximately 1.2x. Its current ratio, which shows if a company can pay its short-term bills with current assets, is roughly 1.2x. The company remains highly generative, producing around $1.8 billion in free cash flow, which represents cash from operations minus capital expenditures, during the fiscal year.

Risk profile comparison

CAVA faces intense competition in both the restaurant and food manufacturing sectors. The company must scale its digital infrastructure and manage new restaurant openings effectively to keep growing. It also relies on third-party suppliers, which means any issues with food safety or ingredient availability could impact the brand.

Hershey operates in a competitive global snacking market where raw material price volatility, specifically for cocoa, is a major concern. The company must successfully integrate new acquisitions like LesserEvil while maintaining its reputation for product quality. Additionally, cybersecurity threats and complex system implementations pose operational risks to its global business.

Valuation comparison

Hershey is cheaper as its Forward P/E on earnings estimates and its P/S ratio on sales over the past twelve months are much lower.

Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy for 2027?

CAVA is my pick, and the case starts with how much room it has to grow. Revenue rose 22% in Q3 as it opened new restaurants and reached 500 locations. It also has no debt and plenty of cash to keep expanding.

In its Q3 2026 results reported on Nov. 4, CAVA came in slightly below Wall Street's forecasts, and the stock sank as growth at existing restaurants cooled sharply from the previous quarter. Produce worries and higher gas prices weighed on traffic, but management raised its full-year outlook for sales at existing restaurants, and its newer locations are exceeding expectations. If you're a patient investor, that pullback may be a chance to buy a growing business at a lower price.

To be fair to Hershey, it beat earnings estimates again in Q3 and raised its profit outlook. It also pays a dividend. But cheaper ingredients and tariff refunds boosted its profit, and it sold fewer products as prices rose. What's more, its share of the U.S. candy market has slipped this year.

For long-term investors seeking a business still in its expansion phase, CAVA offers compelling upside as it grows its store footprint. That long runway for growth is why it's my pick.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cava Group, Hershey, and Walmart. The Motley Fool has a disclosure policy.