CAVA Group: Unsupportable Valuation

Gary Alexander profile picture
Gary Alexander
29.14K Followers
(9min)

Summary

  • Shares of CAVA have surged to all-time highs on the back of recent strong Q2 results, which featured an acceleration in same-store sales.
  • The company is set to report Q3 results on November 12. Watch out for slower consumer spending impacting sales growth trends.
  • Despite a recently raised outlook, CAVA looks very expensive at >100x adjusted EBITDA.
  • I remain at a sell rating for CAVA, as the stock sustains tremendous valuation and fundamental risk.
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With the S&P 500 sitting at 20%+ gains for the year despite rumblings of potential macro malaise and a contentious U.S. election, investors have to take substantial care to ensure our portfolios are protected in the case of downside. Stock selection remains of utmost

This article was written by

Gary Alexander profile picture
29.14K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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