CAVA vs Starbucks Which Should You Buy?

CAVA and Starbucks are two prominent players in the food and beverage industry, each offering unique investments opportunities in the stock market. CAVA, a fast-casual Mediterranean restaurant chain, has been rapidly expanding and gaining market share with its healthy and customizable menu options. In comparison, Starbucks, a global coffeehouse chain, has a long-standing reputation for its extensive menu offerings and strong brand recognition. Both companies have their own strengths and weaknesses, making them intriguing options for investors looking to diversify their portfolios in the restaurant industry.

CAVA or Starbucks?

When comparing CAVA and Starbucks, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between CAVA and Starbucks.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. CAVA has a dividend yield of -%, while Starbucks has a dividend yield of 2.36%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. CAVA reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Starbucks reports a 5-year dividend growth of 10.35% year and a payout ratio of 68.73%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with CAVA P/E ratio at 271.22 and Starbucks's P/E ratio at 29.68. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. CAVA P/B ratio is 23.65 while Starbucks's P/B ratio is -14.99.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, CAVA has seen a 5-year revenue growth of 1.74%, while Starbucks's is 0.75%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with CAVA's ROE at 9.10% and Starbucks's ROE at -46.35%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $126.14 for CAVA and $97.95 for Starbucks. Over the past year, CAVA's prices ranged from $33.32 to $172.43, with a yearly change of 417.50%. Starbucks's prices fluctuated between $71.55 and $103.32, with a yearly change of 44.40%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.