Cava Shares Surge on Upbeat Outlook. Can the Stock's Momentum Continue?

Core Insights - Cava Group's stock has increased by approximately 45% year to date, although it remains down about 15% over the past year, following a positive fourth-quarter earnings report and guidance [1] Financial Performance - Cava's Q4 revenue rose by 21% year over year to $272.8 million, with the company opening 24 new restaurants, bringing the total to 439 locations, a nearly 20% increase compared to the previous year [3] - Adjusted EBITDA increased by 3% year over year to $25.8 million, with operating cash flow for the year at $184.8 million and free cash flow at $26.1 million [6] Sales Growth and Forecast - The company forecasts comparable-restaurant sales growth of 3% to 5% for 2026, a significant improvement compared to the 0.5% increase reported in Q4 of 2025 [3] - Cava's restaurant-level margins (RLMs) were 21.4% in Q4, down from 22.4% a year ago, with an expected RLM of 23.7% to 24.2% for 2026 [5] Expansion Plans - Cava plans to open between 74 and 76 new locations in fiscal 2026, continuing its expansion into new Midwest markets, including Cincinnati, St. Louis, Columbus, and Minneapolis [4] - The company's long-term goal is to reach at least 1,000 restaurants by 2032 [4] Business Model and Strategy - Cava has strong average unit volumes (AUVs) of nearly $3 million and employs a strategy similar to Chipotle, focusing on minimal ingredients that can be used in various combinations [8] - With fewer than 450 locations, Cava is positioned as one of the best expansion stories in the restaurant industry [8]