Analyzing Cheesecake Factory (NASDAQ:CAKE) and CAVA Group (NYSE:CAVA)

CAVA Group (NYSE:CAVA) and Cheesecake Factory (NASDAQ:CAKE) are both mid-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, risk, earnings and analyst recommendations.

Earnings & Valuation

This table compares CAVA Group and Cheesecake Factory”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	$1.18 billion	5.10	$63.74 million	$0.55	93.62
Cheesecake Factory	$3.75 billion	1.46	$148.43 million	$3.69	29.85

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

Analyst Recommendations

This is a summary of current ratings for CAVA Group and Cheesecake Factory, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAVA Group	0	10	17	1	2.68
Cheesecake Factory	2	11	4	1	2.22

CAVA Group presently has a consensus target price of $87.35, indicating a potential upside of 69.63%. Cheesecake Factory has a consensus target price of $95.13, indicating a potential downside of 13.62%. Given CAVA Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe CAVA Group is more favorable than Cheesecake Factory.

Profitability

This table compares CAVA Group and Cheesecake Factory’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CAVA Group	4.82%	8.28%	4.73%
Cheesecake Factory	4.61%	43.97%	6.18%

Insider and Institutional Ownership

73.2% of CAVA Group shares are owned by institutional investors. Comparatively, 94.5% of Cheesecake Factory shares are owned by institutional investors. 6.7% of CAVA Group shares are owned by insiders. Comparatively, 8.0% of Cheesecake Factory shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

CAVA Group has a beta of 1.8, meaning that its stock price is 80% more volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.

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 Cheesecake Factory

The Cheesecake Factory Incorporated operates and licenses restaurants in the United States and Canada. The company operates bakeries that produce cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. It operates restaurants under the brands comprising The Cheesecake Factory, North Italia, Flower Child, Fox Restaurant Concepts. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.