Critical Analysis: CAVA Group (NYSE:CAVA) & First Watch Restaurant Group (NASDAQ:FWRG)

CAVA Group (NYSE:CAVA) and First Watch Restaurant Group (NASDAQ:FWRG) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Insider and Institutional Ownership

73.2% of CAVA Group shares are held by institutional investors. Comparatively, 96.1% of First Watch Restaurant Group shares are held by institutional investors. 12.1% of CAVA Group shares are held by company insiders. Comparatively, 5.0% of First Watch Restaurant Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares CAVA Group and First Watch Restaurant Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CAVA Group	5.88%	9.10%	5.24%
First Watch Restaurant Group	2.09%	3.61%	1.53%

Analyst Recommendations

This is a summary of current recommendations and price targets for CAVA Group and First Watch Restaurant Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAVA Group	0	8	8	0	2.50
First Watch Restaurant Group	0	2	7	1	2.90

CAVA Group currently has a consensus target price of $142.13, suggesting a potential upside of 23.39%. First Watch Restaurant Group has a consensus target price of $23.30, suggesting a potential upside of 21.86%. Given CAVA Group’s higher possible upside, equities analysts plainly believe CAVA Group is more favorable than First Watch Restaurant Group.

Valuation and Earnings

This table compares CAVA Group and First Watch Restaurant Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CAVA Group	$913.49 million	14.45	$13.28 million	$0.46	250.41
First Watch Restaurant Group	$997.25 million	1.16	$25.39 million	$0.33	57.94

First Watch Restaurant Group has higher revenue and earnings than CAVA Group. First Watch Restaurant Group is trading at a lower price-to-earnings ratio than CAVA Group, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

CAVA Group has a beta of 3.21, indicating that its stock price is 221% more volatile than the S&P 500. Comparatively, First Watch Restaurant Group has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Summary

CAVA Group beats First Watch Restaurant Group on 10 of the 15 factors compared between the two stocks.

About CAVA Group

CAVA Group, Inc. owns and operates a chain of restaurants under the CAVA brand in the United States. The company also offers dips, spreads, and dressings through grocery stores. In addition, the company provides online and mobile ordering platforms. Cava Group, Inc. was founded in 2006 and is headquartered in Washington, the District of Columbia.

About First Watch Restaurant Group

First Watch Restaurant Group, Inc., through its subsidiaries, operates and franchises restaurants under the First Watch trade name in the United States. The company was formerly known as AI Fresh Super Holdco, Inc. and changed its name to First Watch Restaurant Group, Inc. in December 2019. First Watch Restaurant Group, Inc. was founded in 1983 and is based in Bradenton, Florida.