CAVA Group (NYSE:CAVA) Shares Down 4.7% - Time to Sell?

Key Points

• CAVA Group shares fell 4.7% on Monday, closing at $73.23 after trading as low as $73.94. Trading volume was far below normal, with about 170,688 shares changing hands versus an average of more than 3.3 million.
• Despite the recent drop, Wall Street sentiment remains constructive: the stock carries a consensus “Moderate Buy” rating and an average target price of $93.44. Recent analyst moves included upgrades to hold and higher price targets from firms like Goldman Sachs and Wolfe Research.
• The company recently posted strong quarterly results, beating EPS and revenue estimates with $0.20 EPS and $438.27 million in revenue, up 32.1% year over year. However, insiders have sold shares recently, and the stock still trades at a rich valuation with a P/E ratio above 140.

Shares of CAVA Group, Inc. (NYSE:CAVA - Get Free Report) dropped 4.7% on Monday . The company traded as low as $73.94 and last traded at $73.23. Approximately 170,688 shares traded hands during trading, a decline of 95% from the average daily volume of 3,318,505 shares. The stock had previously closed at $76.88.

Analyst Ratings Changes

Several brokerages recently issued reports on CAVA. Wall Street Zen upgraded CAVA Group from a "sell" rating to a "hold" rating in a research note on Sunday, May 24th. The Goldman Sachs Group raised their price objective on CAVA Group from $75.00 to $86.00 and gave the stock a "neutral" rating in a research report on Monday, April 13th. Wolfe Research set a $95.00 price objective on CAVA Group in a report on Tuesday, June 30th. DA Davidson boosted their price objective on CAVA Group from $80.00 to $84.00 and gave the company a "neutral" rating in a research report on Thursday, May 21st. Finally, Freedom Capital upgraded CAVA Group to a "hold" rating in a research note on Wednesday, July 1st. One analyst has rated the stock with a Strong Buy rating, seventeen have issued a Buy rating, ten have given a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat.com, CAVA Group currently has an average rating of "Moderate Buy" and a consensus target price of $93.44.

CAVA Group Stock Performance

The company's 50 day moving average price is $82.04 and its 200 day moving average price is $76.34. The company has a market cap of $8.51 billion, a price-to-earnings ratio of 140.34, a P/E/G ratio of 5.27 and a beta of 1.69.

CAVA Group (NYSE:CAVA - Get Free Report) last announced its quarterly earnings results on Tuesday, May 19th. The company reported $0.20 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.17 by $0.03. The firm had revenue of $438.27 million during the quarter, compared to the consensus estimate of $360.89 million. CAVA Group had a net margin of 4.79% and a return on equity of 7.92%. The firm's quarterly revenue was up 32.1% on a year-over-year basis. During the same period last year, the firm posted $0.22 EPS. As a group, analysts predict that CAVA Group, Inc. will post 0.55 EPS for the current year.

Insiders Place Their Bets

In related news, insider Kelly Costanza sold 12,490 shares of the stock in a transaction that occurred on Wednesday, June 17th. The stock was sold at an average price of $90.00, for a total transaction of $1,124,100.00. Following the sale, the insider directly owned 98,490 shares in the company, valued at $8,864,100. This represents a 11.25% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Brett Schulman sold 33,174 shares of CAVA Group stock in a transaction on Monday, June 15th. The shares were sold at an average price of $89.43, for a total value of $2,966,750.82. Following the completion of the transaction, the chief executive officer owned 798,669 shares of the company's stock, valued at approximately $71,424,968.67. The trade was a 3.99% decrease in their position. The SEC filing for this sale provides additional information. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders sold 91,747 shares of company stock worth $7,970,838 over the last ninety days. 6.70% of the stock is owned by insiders.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently added to or reduced their stakes in the stock. Capital Research Global Investors increased its position in CAVA Group by 27.2% in the 4th quarter. Capital Research Global Investors now owns 8,440,040 shares of the company's stock valued at $495,344,000 after acquiring an additional 1,805,174 shares in the last quarter. Capital International Investors grew its stake in shares of CAVA Group by 15.5% during the fourth quarter. Capital International Investors now owns 4,885,317 shares of the company's stock valued at $286,718,000 after purchasing an additional 656,581 shares during the last quarter. Morgan Stanley increased its holdings in shares of CAVA Group by 33.7% in the fourth quarter. Morgan Stanley now owns 3,318,894 shares of the company's stock valued at $194,786,000 after purchasing an additional 835,628 shares in the last quarter. Alliancebernstein L.P. increased its holdings in shares of CAVA Group by 118.3% in the third quarter. Alliancebernstein L.P. now owns 2,953,688 shares of the company's stock valued at $178,432,000 after purchasing an additional 1,600,630 shares in the last quarter. Finally, State Street Corp raised its position in CAVA Group by 1.3% in the 4th quarter. State Street Corp now owns 2,920,442 shares of the company's stock worth $171,401,000 after purchasing an additional 36,508 shares during the last quarter. Institutional investors and hedge funds own 73.15% of the company's stock.

About CAVA Group

CAVA Group, Inc NYSE: CAVA is a leading fast-casual restaurant company specializing in Mediterranean-inspired cuisine. Operating under the CAVA brand, the company offers customizable bowls, pitas and salads built around a variety of proteins, grains, fresh vegetables and house-made spreads. With a focus on high-quality ingredients and made-to-order preparation, CAVA aims to deliver a casual yet elevated dining experience for dine-in, takeout and catering customers.

Founded in 2011 in the Washington, DC metro area by Ike Grigoropoulos, Dimitri Katsanis and Brett Schulman, CAVA has pursued an aggressive growth strategy that included the 2018 acquisition of Zoe's Kitchen.

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