Why Cava Group stock came up today

Actions of Cava Group (COFFEE 20.98%) rose today after the fast-casual restaurant chain delivered another strong earnings report with impressive growth on the top and bottom lines.

As of 9:51 a.m. ET, Cava shares were up 14.1% on the news.

Image source: Cava.

Cava shines again

Cava said like-for-like sales rose 14.4 percent in the period, thanks to a 9.5 percent increase in traffic.

That led to revenue rising 35.2% to $231.4 million, which beat estimates of $219.5 million.

Cava continues to expand its footprint, adding 18 restaurants to bring its total to 341, up 22% from a year ago.

The company also showed strong margin improvement as restaurant-wide profit margin improved to 26.5 percent from 26.1 percent in the year-ago quarter. Margins were leveraged by higher sales. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) nearly tripled from $12.7 million to $34.3 million, and GAAP net income tripled to $19.7 million $0.17 per share, which beat the consensus estimate of $0.12. .

CEO Brett Schulman said, “Our second quarter results continued to demonstrate the strength of our category-defining brand and our unique and compelling value proposition.” He also talked about the addition of grilled steak to the menu, saying, “The grilled steak significantly exceeds our expectations and gives guests another reason to visit Cava and come back more often.”

Can Cava keep winning?

Cava also substantially raised its guidance for the full year. It now sees comparable sales growth of 8.5%-9.5%, up from a prior range of 4.5%-6.5%, as well as an increase in restaurant margin and adjusted EBITDA .

The numbers show that Cava is performing at a high level, with average unit volumes and restaurant-level profit margins that rival Chipotlehis.

Stock is expensive, but Cava has proven it’s worth a premium. While its valuation carries some risk, the restaurant stock continues to look like a long-term winner.