Critical Review: Texas Roadhouse (NASDAQ:TXRH) & CAVA Group (NYSE:CAVA)

Texas Roadhouse (NASDAQ:TXRH) and CAVA Group (NYSE:CAVA) are both large-cap retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, earnings and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Texas Roadhouse	7.47%	30.94%	13.40%
CAVA Group	5.04%	7.37%	4.25%

Insider and Institutional Ownership

94.8% of Texas Roadhouse shares are held by institutional investors. Comparatively, 73.2% of CAVA Group shares are held by institutional investors. 0.5% of Texas Roadhouse shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Texas Roadhouse has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, CAVA Group has a beta of 3.34, indicating that its share price is 234% more volatile than the S&P 500.

Earnings & Valuation

This table compares Texas Roadhouse 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
Texas Roadhouse	$4.63 billion	2.52	$304.88 million	$4.94	35.40
CAVA Group	$728.70 million	19.42	$13.28 million	$0.41	301.86

Texas Roadhouse has higher revenue and earnings than CAVA Group. Texas Roadhouse 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 recent ratings and price targets for Texas Roadhouse and CAVA Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Roadhouse	0	12	10	0	2.45
CAVA Group	0	8	8	0	2.50

Texas Roadhouse currently has a consensus price target of $172.95, indicating a potential downside of 1.11%. CAVA Group has a consensus price target of $115.64, indicating a potential downside of 6.56%. Given Texas Roadhouse’s higher possible upside, equities research analysts plainly believe Texas Roadhouse is more favorable than CAVA Group.

Summary

Texas Roadhouse beats CAVA Group on 10 of the 14 factors compared between the two stocks.

About Texas Roadhouse

Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. It also operates and franchises restaurants under the Texas Roadhouse, Bubba's 33, and Jaggers names in 49 states and ten internationally. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.

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.