Down 44%, Is It Time to Buy This Growth Stock?

Core Viewpoint - Cava has demonstrated impressive growth in the restaurant industry, with significant revenue increases and expanding profit margins following its IPO in June 2023 [1][2]. Financial Performance - Cava achieved a revenue growth of 35.1%, reaching $954.3 million, driven by 58 new restaurant openings and a same-store sales growth of 13.4$2.6 million to $2.9 million, indicating strong performance from new stores and positive impacts from comparable sales [2]. - Adjusted EBITDA rose by 71$73.8 million to $126.2 million, reflecting a surge in profits [2]. Future Growth Prospects - For 2025, Cava forecasts a slowdown in comparable sales growth to 6$150 million-$157 million, representing a 22% growth at the midpoint [5]. - The company aims for a restaurant-level profit margin of 24.8%-25.2%, which is consistent with the previous year [5]. - Cava's comparable sales jumped 21.2% in the fourth quarter, suggesting strong momentum heading into 2025 [8]. - The company plans to grow its store base by 18% this year, with a target of at least 1,000 restaurants by 2032, tripling its current count [8][10]. Market Position and Valuation - Cava's stock has decreased by 44% from its peak, primarily due to valuation concerns rather than business weakness [11]. - The stock trades at a price-to-earnings ratio of over 200 and close to 90 times trailing adjusted EBITDA, indicating high growth expectations are still factored into its valuation [11][12]. - Despite the high valuation, Cava is expected to continue its growth trajectory, similar to Chipotle, with ongoing store openings and improving profits [12].