Cava's (CAVA) valuation has increased significantly since going public just one year ago today. Yahoo Finance's Julie Hyman breaks down the Mediterranean fast-casual restaurant's year of growth and its path to quadrupling its IPO price.
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This post was written by Melanie Riehl
Video Transcript
It's one year since kava went public, and the rally since its debut is catching Wall Street's attention.
Yahoo Finance's Julie Hyman joins me now with a closer look.
Julie.
Yeah, because of how the stock is done.
Since it went public a year ago, the valuation has gone higher, and there's an interesting way to look at that valuation through the prism of how many outlets it has.
K, of course, the Mediterranean fast casual chain.
Some have called it the Mediterranean.
Chipotle, in fact, makes sense to compare it with that company.
The shares of the company went public on June 14th last year at 22 bucks a share, started trading at northwards of $45 a share, and they've quadrupled from the IP O price.
They've doubled since that first trade here, so we've seen the valuation go to about 10 and a quarter billion dollars.
If you break that down into a per restaurant valuation, it has 323 restaurants.
You get a valuation her restaurant here of somewhere like $33 million per restaurant.
So it's it's pretty astonishing, um, to see the comparison with some of the other restaurants.
Chipotle doesn't see that kind of valuation per restaurant.
Chipotle has a lot more, uh, location.
Sweet green, even Portillo shake shack and wing stop or some of the others that we're looking at to compare here.
Um, And even if you think that we will see a chipotle ization of, so to speak, that kind of growth Um, still, it is a relatively lofty valuation when you look at it in these kinds of terms and Julie after a run like this, you know, analysts who cover this name, what do they think?
They think it's worth it here?
Yeah.
I mean, another way to sort of compare it with Chipotle is to look at how many buy ratings you've got.
About two thirds of the analysts who cover Chipotle have buy ratings.
Just over half have by ratings for kava.
And there have been a couple of downgrades, uh, recently JP Moore, recently cutting the stock to neutral from overweight and said that this level of valuation is unprecedented.
That's where the $33 million valuation per store comes from.
Piper Sandler also recently cutting its recommendation to neutral from underweight, uh, from overweight.
Excuse me So there has been a little bit of a pulling back on enthusiasm for the stock, by the way, speaking of pulling back on enthusiasm, Ron, who is the chair of the company he sold about 100 and 23 million of his shares worth $107 million.
That that news coming in a filing on Monday and the largest owner shareholder of the company, International SCAR.
Tall, um, also selling a part of it stake in that company.
So we've seen insiders selling a little bit and also some of the analysts who are fans getting a little bit more tepid on those shares.
All right, Julie.
Thank you.
Appreciate it.