Analyzing CAVA Group (NYSE:CAVA) and Arcos Dorados (NYSE:ARCO)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arcos Dorados	3.80%	36.55%	5.97%
CAVA Group	5.04%	7.37%	4.25%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcos Dorados	$4.49 billion	0.43	$181.27 million	$0.81	11.22
CAVA Group	$845.22 million	18.71	$13.28 million	$0.41	338.17

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

Institutional and Insider Ownership

55.9% of Arcos Dorados shares are owned by institutional investors. Comparatively, 73.2% of CAVA Group shares are owned by institutional investors. 12.1% of CAVA Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Arcos Dorados has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500. Comparatively, CAVA Group has a beta of 3.33, meaning that its share price is 233% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Arcos Dorados and CAVA Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcos Dorados	0	0	2	0	3.00
CAVA Group	0	8	8	0	2.50

Arcos Dorados presently has a consensus target price of $13.50, suggesting a potential upside of 48.51%. CAVA Group has a consensus target price of $116.93, suggesting a potential downside of 15.67%. Given Arcos Dorados’ stronger consensus rating and higher possible upside, research analysts clearly believe Arcos Dorados is more favorable than CAVA Group.

About Arcos Dorados

Arcos Dorados Holdings Inc. operates as a franchisee of McDonald’s restaurants. It has the exclusive right to own, operate, and grant franchises of McDonald’s restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela. The company was founded in 2007 and is based in Montevideo, Uruguay.

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.