CAVA Group Inc. (NYSE: CAVA) saw its stock plummet 5.06% in Friday's intraday trading, following a sharp decline in after-hours trading on Thursday. The Mediterranean fast-casual restaurant chain's stock took a hit despite reporting better-than-expected first-quarter 2025 earnings, as investors focused on the company's cautious full-year outlook.
For Q1 2025, CAVA reported impressive results, with revenue of $331.83 million surpassing analyst expectations of $326.88 million. Adjusted earnings per share came in at $0.22, significantly beating the estimated $0.14. The company also posted strong same-restaurant sales growth of 10.8%, outpacing expectations of 10.4%. However, these positive results were overshadowed by the company's conservative guidance for the rest of the year.
The primary factor driving the stock's decline appears to be CAVA's full-year 2025 guidance. While the company raised its forecast for new restaurant openings to 64-68 from the previous 62-66, it maintained its same-restaurant sales growth projection at 6-8%. This outlook falls short of the FactSet analyst consensus of 8.4% and indicates a potential slowdown compared to the robust 10.8% achieved in Q1. The discrepancy between the strong Q1 performance and the unchanged full-year guidance has led investors to reassess the company's growth trajectory and valuation, resulting in the significant stock price drop.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.