Veteran trader reviews Cava Group earnings and has a sharp take

Waiter, there's a fog in my soup.

Cava Group (CAVA) took a four-alarm shellacking on Aug. 13 after the Mediterranean fast-casual restaurant chain missed second-quarter-revenue estimates and lowered its full-year forecast for same-store sales.

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The company's shares tumbled nearly 20% and Chief Financial Officer Tricia Toliver discussed the current economy during the earnings call.

“We’re operating in a fluid macroeconomic environment, and it’s one that sort of creates a fog for consumers where things are changing constantly,” Toliver told analysts. “It’s hard to see the clear. And those during those times they tend to step off of the gas.”

It seems that the fog is getting pretty thick out there, and many consumers have been hitting the brakes when it comes to dining out.

In the first half of 2025, US restaurants and bars saw one of the weakest six-month periods of sales growth in the past decade, according to a CNN analysis of U.S. Commerce Department data.

Cava Group shares tumbled after its earnings report.

Canva

Veteran trader: Cava balance sheet a work of art

This year has shown weaker growth than even during the Covid-19 pandemic, when restaurants and bars closed due to lockdown orders, CNN reported,

And in June Campbell’s Co. (CPB) said it saw stronger quarterly sales of broth and condensed soup as more Americans cooked their meals at home.

More Restaurants

“The team’s done an outstanding job navigating tariffs both on the supply chain construction side so that we’re not anticipating material changes at all in our ability to grow and continue to leverage those robust new restaurant openings that we’ve been experiencing,” Toliver said.

TheStreet Pro's Stephen Guilfoyle pulled up a chair at Cava Group's table and reviewed the company's financials.

The firm has hit a bump, the veteran trader said. “Still, cash flows are positive, margins are holding up. Same-store sales are pressured. That said, the balance sheet is a work of art. In theory, I find this company investable as long as a decent entry point can be found.”

Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, pointed to the stock's simple moving average, which is used to calculate the average price of a stock over a specific period, and exponential moving average, which unlike the SMA places more emphasis on recent price data.

“The stock has now lost its 50-day SMA after losing its 21-day EMA,” he said. “This will force portfolio managers to either exit the stock or reduce exposure as the 200-day SMA is nothing but a distant memory.”

Cava Group's stock is down 40% in 2025 and has tumbled 29% from a year ago.

Analyst sees buying opportunity

Investment firms issued research reports following Cava Group's earnings report.

While “disappointed” by Cava's Q2 same-restaurant sales growth of 2.1%, Stifel analyst Chris O'Cull said that doesn't justify a $2 billion hit to its market value. He sees the sharp pullback in shares as a buying opportunity, according to The Fly.

Despite the comparables miss, Cava beat Ebitda estimates and new stores are ramping quickly, said O'Cull, who views the recent weakness as “a temporary setback, not a change in the fundamental outlook.”

Stifel affirmed a buy rating and $125 price target on Cava shares.

KeyBanc analyst Christopher Carril lowered the firm's price target on Cava Group to $85 from $100 and maintained an overweight rating on the shares.

The investment firm noted that Q2 same-store-sales trends missed consensus and likely fell short of buy-side expectations.

That said, earnings per share and Ebitda exceeded Wall Street's estimates as store-level margins fell in line with the analyst consensus, and general and administrative expense largely offset most of the revenue shortfall. G&A expense in the current quarter was 11.4% of revenue compared with 12.1% a year earlier.

Same-store-sales growth improved in July and in the quarter-to-date, but trends likely remain short of the mid-single-digit-percent range Wall Street expected in the second half, the analyst said.

Bank of America Securities lowered its price target on Cava Group to $100 from $121 and reiterated a buy rating on the shares.

A “modest” revenue miss, despite a “more meaningful” miss on same-store-sales growth, is a function of an evolving restaurant maturity curve, the firm said.

While the tailwind to comparisons from maturing stores has moderated, the investment firm said it was encouraged by new unit-volume strength across markets of widely disparate sizes.