CAVA Group, Inc. (CAVA): what the price requires
At today's price, CAVA Group, Inc. (CAVA) is priced for today's economics sustained for ~27.4 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/CAVA
Headline
| Field | Value |
|---|---|
| Ticker | CAVA |
| Company | CAVA Group, Inc. |
| Current price | $71.62/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin today | 5.8% |
| Must persist for | 27.4y |
| Multiple paid | 110x operating income |
Solve inputs: computed at a 13.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~3.6 years.
Reconcile: at the x-ray's 9.3% required return this reads ~15.7 years; the models below use their own rates.
How unusual the bet is: elevated (limited comparison data)
| Reference | Value |
|---|---|
| sustained it ~10 years at this level | 14% |
| implied end-window share | 1% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 13.40x | 4 | expensive |
| Earnings | 12.74x | 1 | expensive |
| Relative | 2.03x | 3 | expensive |
| Growth | 0.87x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.
Per-Model Detail (n=11)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $43.30 | 1.65x | yes | FCF base $0.1B, growth 23% (input: historical growth), terminal g 4.0%, WACC 8.7%, 7yr projection |
| DCF Exit Multiple | Growth | $81.99 | 0.87x | yes | Exit EV/EBITDA: 61.7x / 63.7x / 65.7x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $35.32 | 2.03x | yes | P/E 60.87x (blended: static sector reference 28x + trailing (TTM) 138x), scenarios: 49.1x / 60.9x / 72.7x (bear / base = reference held flat / bull), EV/EBITDA 31.72x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $5.63 | 12.72x | yes | BV/sh $6.85, ROE (TTM) 7.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $5.09 | 14.07x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $87.70 | 0.82x | yes | Rev $1.3B, growth 23% (input: historical growth; tapered), Terminal P/S: 5.3x / 6.6x / 7.9x (bear / base = today's held flat / bull, cap 12x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $0.01 | 7162.00x | yes | Normalized EBIT (3y avg op income, one-time charges added back) $0.04B × (1−22%) / WACC 8.7% → EPV (no growth) (excluded from median) |
| Residual Income | Asset | $5.01 | 14.30x | yes | BV $6.85 + 5yr PV of (ROE (TTM) 7.6% − Kₑ 9.3%) × BV; BV grows 4.9%/yr |
| Graham Number | Asset | $8.95 | 8.00x | yes | √(22.5 × EPS $0.52 × BVPS $6.85) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $16.30 | 4.39x | yes | EBITDA $0.14B × sector EV/EBITDA 18.0x |
| FCF Yield | Earnings | $0.01 | 7162.00x | yes | FCF $38.9M / Kₑ 9.3% — zero-growth perpetuity (excluded from median) |
| SBC-Adj FCF Yield | Earnings | $0.01 | 7162.00x | yes | SBC-adj FCF $0.02B (FCF $0.04B − SBC $0.02B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $0.44 | 162.77x | yes | EPS $0.52 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $1.07 | 66.93x | yes | BV $6.85 × (ROIC 1.4% / WACC 8.7%) (excluded from median) |
| P/Sales Sector | Relative | $48.92 | 1.46x | yes | Revenue $1.29B × sector P/S 4.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $5.62 | 12.74x | yes | EPS $0.52 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $403.0m |
| Net debt / NOPAT (after-tax) | -6.61x (net cash) |
| Net debt / operating income (pre-tax) | -5.18x (net cash) |
| Share count CAGR (dilution) | 3.0% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- CAVA is a fast-growing Mediterranean fast-casual chain still early in its build-out, at 459 restaurants after 20 net new openings in the latest quarter, with new units running at average unit volumes near $3 million.
- The price is the dominant risk: today's level pays roughly 136 times company-wide operating income, a multiple that requires the company to compound near its self-funding ceiling for about three decades, a span only a sliver of fast-growers have ever sustained.
- The thing to watch is whether traffic keeps carrying the comp: same-restaurant sales rose 9.7% in the first quarter with 6.8 points of that from guest traffic rather than price, and the durability of that traffic is what the valuation is betting on.
Bull Case
Strip away the multiple for a moment and look at what the business is actually doing, because the operating story is genuinely rare in restaurants. Same-restaurant sales grew 9.7% in the most recent quarter, and the composition is what matters: 6.8 percentage points came from more guests walking in, with only 2.9 points from price and mix. Traffic-led comps are the gold standard in this industry, because they mean the brand is winning new customers rather than squeezing existing ones with menu hikes. CAVA frames its own playbook in the 10-K as "creating, capturing, and retaining demand by increasing our brand awareness while also building upon our existing value proposition," and the traffic numbers say it is working.
The unit economics are what make the growth self-funding rather than a cash bonfire. New restaurants are opening at average unit volumes around $3 million with productivity at or above 100% of target, and the company ended the quarter with $403 million of cash and no debt. A chain that can open a new store that immediately produces $3 million in sales, and pay for the next store out of its own cash flow, does not need to dilute shareholders or lever up to grow. That is the structural difference between CAVA and the many restaurant concepts that grew fast and then stalled when the capital ran out.
The runway is the real prize. At 459 locations, CAVA is a fraction of the footprint a successful national fast-casual brand eventually reaches, and management raised full-year guidance on the back of the quarter, lifting adjusted EBITDA expectations and nudging up both same-restaurant sales and net-new-opening targets. The static valuation methods, which price the current store base and current profit, cannot see the value in the next several hundred stores. That gap between what the numbers show today and what the build-out could deliver is precisely the durability premium the price is paying for, and the early-unit productivity is the evidence that the premium might be earned.
Bear Case
Watch where the cash and the shares are going, because the capital-allocation picture complicates the clean-growth story. CAVA pays no dividend and runs no buyback; instead its share count has been rising at roughly 3% a year, the signature of stock-based compensation funding a growth-stage workforce. That is normal for a young restaurant company, but it means per-share value has to outrun the dilution, and at this multiple the bar is unforgiving. The company also acknowledges in its 10-K that it "may not be able to successfully identify and secure a sufficient number of attractive restaurant locations," which is the quiet admission that the entire thesis depends on a real-estate pipeline that has to keep delivering hundreds of high-volume sites.
The valuation is where the bear case becomes arithmetic. At roughly 136 times company-wide operating income, the price requires CAVA to compound near its self-funding ceiling for about thirty years. Restaurant concepts do not sustain hypergrowth for three decades; the historical record is that only a small fraction of fast-growers held an elevated pace even ten years. Every static method, asset value, earnings power, and even blended peer multiples, lands far below the price; only the forward-growth model reaches it, and only by extrapolating today's growth far into the future. If same-restaurant sales decelerate toward the company's own full-year guidance of 4.5% to 6.5%, well below the 9.7% the quarter delivered, the multiple has a very long way to fall.
The margin structure adds the operational risk. Restaurant profit is squeezed between labor and food costs, and the filing is candid that while the company seeks to offset wage increases "with operational efficiencies and by leveraging CAVA Same Restaurant Sales Growth, such measures may not fully offset any wage increases." Today's restaurant-level margins ride on traffic that is running hot; a slowdown would expose the cost structure at the same time it compresses the comp. Competition is the accelerant: the 10-K names "significant competition from national, regional, and locally-owned restaurants" in the same fast-casual lane, and a category that CAVA helped popularize invites imitators precisely when its own units are most profitable.
Valuation
Begin with the size of the bet, because it is unusual even among growth stocks. At today's price CAVA trades around 136 times company-wide operating income, which inverts to a requirement that the company grow near its self-funding ceiling for roughly thirty years. The current operating margin sits near 5%, so the price is not paying for today's profit; it is paying for a build-out that has to run for decades at a pace almost no restaurant concept has matched. The internal reliability of that solve is low precisely because the multiple is so far outside the range where these methods have much to anchor on, which is itself the signal: the price is in rarefied territory.
The methods could not disagree more sharply. The asset-value lenses, starting from book value under $7 per share, and the earnings-power methods that capitalize current cash flow, land at small fractions of the price, because a young company's current balance sheet and current profit simply cannot reach this level. Peer multiples land closer but still well below. Only the forward-growth framing reaches the price, and it does so by crediting many years of 20%-plus compounding. The pattern is the most extreme version of a durability premium: every frame that prices what exists today says richly valued, and the entire case rests on the one frame that prices what has not happened yet. That is not a flaw in the methods; it is an honest map of how much of this price is a bet on the future.
Solvency is the one place the bear has nothing to grab. CAVA carries no debt and ended the quarter with about $403 million in cash, so there is no leverage to amplify a downturn and no financing risk to the store program; growth is funded from the balance sheet and operating cash flow. The cohort is the better comparison than any single multiple: among traffic-driven fast-casual peers, CAVA's growth rate is at the top, but so is its multiple, so the question is not whether it grows but whether it grows long enough and fast enough to justify a price that already assumes a generation of success. The cash cushion buys time; it does not lower the bar the multiple has set.
Catalysts
The first quarter was a broad beat that pulled guidance higher. Revenue rose 32.2% to $438.3 million, same-restaurant sales grew 9.7%, and adjusted EBITDA reached $61.7 million. The quality was in the traffic: 6.8 of the 9.7 comp points came from guests rather than price, and the company opened 20 net new restaurants to reach 459 locations, with new units running at roughly $3 million in average unit volume and productivity at or above target.
Management responded by raising the full-year 2026 outlook, lifting adjusted EBITDA guidance to a range of $181.0 million to $191.0 million and nudging up both same-restaurant sales and net-new-opening targets. The key tension for the next prints is the gap between the quarter's pace and the guide: second-quarter comps were reported tracking near the first quarter's 9.7%, well above the revised full-year midpoint of 4.5% to 6.5%. That spread frames the watch items: whether traffic-led comps hold as the store base grows, and whether new-unit volumes stay near $3 million as the company pushes into newer markets. Both feed directly into the multi-decade growth the price requires.
Peer Cohorts (Per Segment, With Filing Citations)
CAVA (reported)
- SHAK (SHAKE SHACK INC.)
- (no filing in the citation store)
- WING (WINGSTOP INC.)
- (no filing in the citation store)
- BROS (DUTCH BROS INC.)
- (no filing in the citation store)
- CAKE (THE CHEESECAKE FACTORY INCORPORATED)
- (no filing in the citation store)
- TXRH (Texas Roadhouse, Inc.)
- (no filing in the citation store)
- EAT (BRINKER INTERNATIONAL, INC.)
- (no filing in the citation store)
- WEN (Wendy's Co)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release