SHAK - These consumer sector IPOs soared - now earnings are coming

2023-08-07 08:28:48 ET

Four IPOs in the consumer sector continue to trade well above their offering price. The $365M CAVA Group ( NYSE: CAVA ) IPO priced on June 14 at $22 and closed on Friday at $53.44. GEN Restaurant Group ( NASDAQ: GENK ) priced its $50M IPO on June 27 at $12 and closed on Friday at $18.94. Savers Value Village ( NYSE: SVV ) priced its $401M IPO on June 28 at $18 and closed on Friday at $23.94. The newest debutante of the group, Oddity Tech ( NASDAQ: ODD ) priced its $424M IPO on July 18 at $35 and closed on Friday at $50.64. All four of the companies had priced their IPOs above the initial expected ranges.

CAVA Group: The red-hot rally for CAVA ( CAVA ) has the restaurant stock trading with a higher market cap than Wingstop ( WING ), Wendy's ( WEN ), Shake Shack ( SHAK ), and Papa John's International ( PZZA ), despite its relatively small size in terms of units. Analysts were largely positive on CAVA Group with their first cracks at covering the new restaurant name, including bull ratings from Stifel (Buy, $48 price target), Baird (Overweight, $50 price target), William Blair (Buy), JPMorgan (Buy, $45 price target), Jefferies (Buy, $48 price target), and Piper Sandler (Buy, $45 price target). JPMorgan analyst John Ivankoe said the firm views the CAVA ( CAVA ) business as a well-designed operating platform and broadly appealing consumer offering that can expand from its current 263 locations in 22 states to scale into a national brand built on a series of high ROI company-operated restaurants. The high valuation on the restaurant stock will be tested when CAVA ( CAVA ) post its first earnings report as a publicly-traded company on August 15.

GEN Restaurant Group: GEN Restaurant Group ( GENK ) will issue its first earnings report as a publicly-traded company on August 14 after running up a double-digit gain over the last month. The Korean BBQ restaurant operator trades at 48X projected EPS and has a short interest outstanding on it of 2.77% of total float. The market cap on GENK is higher than the caps on more established restaurant operators such as Denny's ( DENN ), Potbelly ( PBPB ), and El Pollo Loco ( LOCO ).

Savers Value Village: Savers Value Village ( SVV ) has held on to its IPO gains as some investors see a trade-down benefit for the thrift-store operator in the current macroeconomic backdrop. Seeking Alpha analyst Overlooked Opportunities said Savers Value Village presents a compelling investment opportunity with operational efficiencies and a unique shopping experience. Savers Value Village ( SVV ) attracted bull ratings from Jefferies (Buy), Goldman Sachs (Buy), UBS (Buy), Piper Sandler (Overweight), and Baird (Outperform). SVV will issue its first earnings report as a publicly-traded company on August 10.

Oddity Tech: Oddity Tech ( ODD ) spun 8.6% lower on Friday, but closed well over its IPI pricing level and still has a market cap of just under $3B. Seeking Alpha analyst The Value Investor noted that Oddity Tech ( ODD ) aims to disrupt the beauty and wellness market by focusing on technology and a direct-to-consumer business model. However, the beauty and wellness tech company is seen having some seasonality risk with revenue in the second half of the year. Wall Street analysts will have their say on the stock when the quiet period on Oddity Tech ( ODD ) expires during the third week of August. Ahead of the rush of analyst ratings, Oddity Tech's ( ODD ) first earnings report is scheduled for August 9.

More on restaurant stocks:

• McDonald's: Set To Become A Poor Dividend Growth Stock
• Chipotle: Finally, It's Approaching Fair Valuation
• CAVA Group: One Of The Most Overvalued Stocks In The Market
• Restaurant stocks with the highest Seeking Alpha Quant Ratings

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