Cava Group (CAVA) third quarter earnings and revenue beat estimates

Cava Group (CAVA) came out with quarterly earnings of $0.15 per share, beating the Zacks Consensus Estimate of $0.11 per share. This compares to earnings of $0.06 per share a year ago. These figures are adjusted for one-time items.

This quarterly report represents an earnings surprise of 36.36%. A quarter ago, it was expected that this Mediterranean restaurant chain would post earnings of $0.13 per share when it actually produced earnings of $0.17, which corresponds to a surprise of 30.77%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Cava, which belongs to the Zacks Retail – Restaurants industry, posted revenues of $243.82 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 3.70%. This compares to year-ago revenue of $175.55 million. The company has topped consensus revenue estimates four times over the past four quarters.

The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings release.

Cava shares have gained about 243.9% year-to-date, while the S&P 500 has gained 25.8%.

Although Cava has outperformed the market so far this year, the question for investors is: What’s next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarters, but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend is favorable for Cava. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. Therefore, the shares are expected to outperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the coming days. The current consensus EPS estimate is $0.03 on revenues of $213.72 million for the coming quarter and $0.44 on revenues of $941.31 million for the current one fiscal year.

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