Financial Analysis: Yum! Brands (NYSE:YUM) and CAVA Group (NYSE:CAVA)

Yum! Brands (NYSE:YUM) and CAVA Group (NYSE:CAVA) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.

Volatility and Risk

Yum! Brands has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, CAVA Group has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500.

Profitability

This table compares Yum! Brands and CAVA Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Yum! Brands	39.14%	-25.54%	21.03%
CAVA Group	4.50%	7.87%	4.45%

Valuation and Earnings

This table compares Yum! Brands 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
Yum! Brands	$8.21 billion	5.36	$1.56 billion	$12.46	12.95
CAVA Group	$1.18 billion	5.83	$63.74 million	$0.54	109.11

Yum! Brands has higher revenue and earnings than CAVA Group. Yum! Brands 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 Ratings

This is a summary of recent ratings and recommmendations for Yum! Brands and CAVA Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yum! Brands	1	12	14	0	2.48
CAVA Group	0	10	17	1	2.68

Yum! Brands currently has a consensus price target of $175.67, indicating a potential upside of 8.87%. CAVA Group has a consensus price target of $83.88, indicating a potential upside of 42.37%. Given CAVA Group’s stronger consensus rating and higher possible upside, analysts plainly believe CAVA Group is more favorable than Yum! Brands.

Insider & Institutional Ownership

82.4% of Yum! Brands shares are held by institutional investors. Comparatively, 73.2% of CAVA Group shares are held by institutional investors. 0.1% of Yum! Brands shares are held by company insiders. Comparatively, 6.7% of CAVA Group 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.

Summary

CAVA Group beats Yum! Brands on 9 of the 15 factors compared between the two stocks.

About Yum! Brands

Yum! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. The company operates through the KFC Division, the Taco Bell Division, the Pizza Hut Division, and the Habit Burger Grill Division segments. It also operates restaurants under the KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill brands, which specialize in chicken, pizza, made-to-order chargrilled burgers, sandwiches, Mexican-style food categories, and other food products. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to Yum! Brands, Inc. in May 2002. Yum! Brands, Inc. was incorporated in 1997 and is headquartered 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.