Value
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 6.8 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 1.0 |
| PEG | 2.3 |
| Analyst target | 7.5 |
- ▸Forward P/E: 81.2x
- ▸PEG: 5.36
CAVA · Why this verdict
Why CAVA Group (CAVA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.2/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
CAVA is an industry growth leader (31% YoY) with a three-quarter beat streak and 25.4% analyst upside, but a 79x forward P/E, negative free cash flow conversion and earnings due in 3 days make it a speculative recovery.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
CAVA shows strong 31% YoY growth and ranks as an industry growth leader, with revenue growth scored 10 out of 10. Growth breakdown | Revenue growth stays above 20% YoY over the next 12 months. | →Stable |
| CounterRestaurant growth from rapid unit expansion can fade quickly if same-store traffic slows, and consumer-cyclical demand is fragile. | ||
The stock trades at a forward P/E of 79.1x with a PEG of 5.07, an expensive valuation. Valuation breakdown | Earnings growth compresses the forward multiple below 60x without a price decline. | ↓Deteriorating |
| CounterA premium multiple leaves no room for a growth disappointment, and a 40% drawdown shows the market is already punishing the stock. | ||
Earnings quality is a red flag, with free cash flow at -1% of net income, even though the Piotroski score is 9/9. Quality breakdown | Free cash flow to net income turns positive and rises above 50%. | →Stable |
| CounterContinued heavy expansion spending may keep cash conversion near zero, and below-average business quality limits the multiple. | ||
The price of $58.74 is 25.4% below the $73.65 analyst target, with a recovery setup (RSI 64, MACD improving) after a death cross. Upside pct | The stock closes much of the gap to the analyst target over 12 months. | ↓Deteriorating |
| CounterThe stock is still below its 200-day average with a confirmed downtrend (-1.1%/30d slope), and a 14.3% downside to the stop gives only a modest reward-to-risk of 1.8. | ||
Earnings are due in 3 days, a binary event with a 3-quarter beat streak but 15% short interest and an elevated put/call ratio of 1.38. Days to earnings | CAVA beats the EPS estimate again and holds guidance. | ↓Deteriorating |
| CounterWith high implied volatility (97%) and heavy put positioning, even a beat could trigger a sharp sell-off. | ||
CAVA shows strong 31% YoY growth and ranks as an industry growth leader, with revenue growth scored 10 out of 10.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 20% YoY over the next 12 months.
CounterRestaurant growth from rapid unit expansion can fade quickly if same-store traffic slows, and consumer-cyclical demand is fragile.
The stock trades at a forward P/E of 79.1x with a PEG of 5.07, an expensive valuation.
↓DeterioratingValuation breakdown
- Expectation
- Earnings growth compresses the forward multiple below 60x without a price decline.
CounterA premium multiple leaves no room for a growth disappointment, and a 40% drawdown shows the market is already punishing the stock.
Earnings quality is a red flag, with free cash flow at -1% of net income, even though the Piotroski score is 9/9.
→StableQuality breakdown
- Expectation
- Free cash flow to net income turns positive and rises above 50%.
CounterContinued heavy expansion spending may keep cash conversion near zero, and below-average business quality limits the multiple.
The price of $58.74 is 25.4% below the $73.65 analyst target, with a recovery setup (RSI 64, MACD improving) after a death cross.
↓DeterioratingUpside pct
- Expectation
- The stock closes much of the gap to the analyst target over 12 months.
CounterThe stock is still below its 200-day average with a confirmed downtrend (-1.1%/30d slope), and a 14.3% downside to the stop gives only a modest reward-to-risk of 1.8.
Earnings are due in 3 days, a binary event with a 3-quarter beat streak but 15% short interest and an elevated put/call ratio of 1.38.
↓DeterioratingDays to earnings
- Expectation
- CAVA beats the EPS estimate again and holds guidance.
CounterWith high implied volatility (97%) and heavy put positioning, even a beat could trigger a sharp sell-off.
Per-dimension breakdown
Quality
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.8 |
| ROA | 2.3 |
| Gross margin | 3.5 |
| Op margin | 3.0 |
| Net margin | 2.4 |
| Current ratio | 8.4 |
| FCF quality | 0.0 |
| Moat | 6.4 |
| Piotroski F | 10.0 |
- ▸Earnings quality RED FLAG: -1% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
8.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 6.0 |
- ▸Strong growth: 31% YoY
Momentum
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.3 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 3.7 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.2%/30d — confirmed downtrend
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.5 |
| Analyst rating | 7.5 |
| Price target | 8.9 |
- ▸Analyst upside: 35%
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.5 |
| holder change | 1.8 |
| notable moves | 3.0 |
- ▸Insider buying (low materiality) — $482,340 (0.007% of mkt cap)
- ▸Institutions reducing
Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.7 |
| quality rank | 4.4 |
| growth rank | 9.3 |
- ▸Industry growth leader
- ▸Conservative debt levels
Technical
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.0 |
| support resistance | 2.1 |
| 52w position | 2.2 |
Risk (lower is worse)
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.7 |
| days to cover | 6.2 |
| volatility | 0.0 |
| put call | 4.4 |
| implied vol | 0.0 |
| beta | 4.1 |
| debt equity | 7.3 |
- ▸High IV: 105%
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 6.0 |
- ▸Earnings today
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (4)
- MOMENTUM:6.6>=5.5
- INSIDER:OK
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:1.4<1.5@spot
- EARNINGS_PROXIMITY:0d<=7d
Warning (2)
- DEATH_CROSS:momentum=6.6>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.42
Upside
+21.2%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 67
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.76>1.3
Investment implication
The F-path SELL output reflects an overall score of 3.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 8.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:1.4<1.5@spot, EARNINGS_PROXIMITY:0d<=7d) reinforce the read. Current asymmetry R:R is 1.42 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 8.0, Catalyst at 7.2, and Momentum at 6.6; the weakest are Technical at 1.8, Value at 3.1, and Insider at 3.4. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 1.42 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Industry Growth Leadership
Trip ifRevenue growth falls below 15% YoY from the current 31%.
- P2Extreme Valuation Multiple
Trip ifForward P/E exceeds 100x from the current 79.1x.
- P3Weak Cash Conversion
Trip ifFree cash flow to net income stays below 0% for 4 consecutive quarters.
- P4Analyst Upside Recovery Setup
Trip ifUpside to the analyst target falls below 10% from the current 25.4%.
- P5Imminent Earnings Binary Event
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.