Shares of fast-casual Mediterranean food chain Cava Group (CAVA -0.09%) were on the move today, jumping after the company reported better-than-expected results in its third-quarter earnings report Tuesday evening.
The gains continued a surge that began last year as Cava's Chipotle-like concept is clearly resonating with customers. The stock was up 11% as of 10:30 a.m. ET.
Image source: Cava Group.
Cava shines again
The top line soared again at Cava as same-store sales jumped a whopping 18% on traffic growth of 13%. That drove revenue up 39% to $243.8 million, which easily beat the consensus estimate of $233.6 million.
Average unit volumes improved from $2.6 million to $2.8 million, showing that individual restaurants are generating more business, and restaurant-level profit margin was 25.6%, which is in league with Chipotle and other top restaurant operators.
On the bottom line, net income nearly tripled from $6.8 million to $18 million, and earnings per share rose from $0.06 to $0.15 on the basis of generally accepted accounting principles (GAAP), which topped estimates of $0.11.
CEO Brett Schulman was quoted as saying: "Our third-quarter results demonstrate the strength of our Mediterranean category-defining brand and the broad appeal of our unique value proposition, creating what is quickly becoming the next major cultural cuisine category."
What's next for Cava
Not surprisingly, the company raised its full-year guidance, calling for same-store sales of 12%-13%, up from a previous estimate of 8.5%-9.5%, and it sees adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $121 million-$126 million, up from a previous range of $109 million-$114 million. It also raised its store opening plan slightly to 56-58.
Cava continues to expand rapidly and sales at its stores are soaring. While the stock is expensive, it's easy to see why it keeps gaining. If Cava can continue its strong growth, the stock could have a lot further to climb.
