Critical Contrast: Starbucks (NASDAQ:SBUX) and CAVA Group (NYSE:CAVA)

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

Analyst Recommendations

This is a breakdown of recent recommendations for CAVA Group and Starbucks, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAVA Group	0	8	11	1	2.65
Starbucks	2	10	15	1	2.54

CAVA Group currently has a consensus target price of $95.50, indicating a potential upside of 49.68%. Starbucks has a consensus target price of $102.96, indicating a potential upside of 24.26%. Given CAVA Group’s stronger consensus rating and higher possible upside, equities research analysts plainly believe CAVA Group is more favorable than Starbucks.

Earnings & Valuation

This table compares CAVA Group and Starbucks”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CAVA Group	$963.71 million	7.68	$130.32 million	$1.19	53.62
Starbucks	$36.18 billion	2.60	$3.76 billion	$2.32	35.72

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

Volatility & Risk

CAVA Group has a beta of 2.5, indicating that its stock price is 150% more volatile than the S&P 500. Comparatively, Starbucks has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Profitability

This table compares CAVA Group and Starbucks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CAVA Group	12.98%	9.83%	5.75%
Starbucks	7.18%	-36.23%	8.51%

Insider & Institutional Ownership

73.2% of CAVA Group shares are owned by institutional investors. Comparatively, 72.3% of Starbucks shares are owned by institutional investors. 6.8% of CAVA Group shares are owned by insiders. Comparatively, 0.1% of Starbucks shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

CAVA Group beats Starbucks on 9 of the 14 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 Starbucks

Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of coffee worldwide. The company operates through three segments: North America, International, and Channel Development. Its stores offer coffee and tea beverages, roasted whole beans and ground coffees, single serve products, and ready-to-drink beverages; and various food products, such as pastries, breakfast sandwiches, and lunch items. The company also licenses its trademarks through licensed stores, and grocery and foodservice accounts. The company offers its products under the Starbucks Coffee, Teavana, Seattle’s Best Coffee, Ethos, Starbucks Reserve, and Princi brands. Starbucks Corporation was founded in 1971 and is based in Seattle, Washington.