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Chipotle (CMG) Stock Up on Q2 Earnings Beat & Robust Outlook
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Chipotle Mexican Grill, Inc. (CMG - Free Report) reported second-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, the top and the bottom lines increased on a year-over-year basis. Following the solid results, shares of the company appreciated 8.6% during the after-hours trading session on Jul 26 as the company provided a robust outlook for third-quarter 2022.
Q2 Earnings & Revenue Discussion
During second-quarter 2022, adjusted earnings of $9.30 per share beat the Zacks Consensus Estimate of $9.03 by 1.2%. The bottom line improved 24.7% from $7.46 reported in the year-ago quarter.
Quarterly revenues of $2,213.3 million missed the consensus mark of $2,244 million. The top line increased 17% on a year-over-year basis. The upside can primarily be attributed to robust comparable restaurant sales and new restaurant openings. In the quarter under review, Chipotle opened 42 new restaurants, taking the total restaurant count to 3,052.
Digital sales contributed 39% to sales during the quarter. During the second quarter, comparable restaurant sales increased 10.1% year over year, following growth of 9% (in first-quarter 2022), 15.2% (in fourth-quarter 2021), 15.1% (third-quarter 2021), 31.2% (second-quarter 2021), 17.2% (first-quarter 2021) and 5.7% (fourth-quarter 2020).
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
During second-quarter 2022, food, beverage and packaging costs, as a percentage of revenues, remained flat year over year to 30.4%. In the second quarter of 2022, the benefit of menu price increases was overshadowed by higher costs for avocados, packaging, dairy, beef and chicken.
During the reported quarter, restaurant-level operating margin came in at 25.2%, down from 24.5% in the year-ago quarter. The increase was primarily due to the benefit of menu price increases and lower delivery fees. But it was overshadowed by higher food costs and increases in hourly wages.
Adjusted net income in the reported quarter amounted to $261.2 million compared with $212.8 million in the prior-year quarter.
Balance Sheet
Chipotle continues to impress investors with a solid financial position. As of Jun 30, the company reported cash and cash equivalent of $520.9 million compared with $815.4 million as of Dec 31, 2021
Inventory totaled $29.5 million as of Jun 30, 2022 compared with $32.8 million as of Dec 31, 2021. Goodwill (as a percentage of total assets) came in at 0.3% at the end of second-quarter 2022.
During the second quarter, the company repurchased $261.1 million worth of stocks at an average price of $1,350. As of Jun 30, the company had approximately $319.7 million available for the buyback program.
Outlook
For the third quarter, the company expects comps growth, including planned price increases in August, in the mid to high-single digits.
In 2022, the company expects to open 235 to 250 new restaurants. It expects 2022 tax rate in the range of 25-27%.
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Dollar Tree Inc. (DLTR - Free Report) , Designer Brands Inc. (DBI - Free Report) and Potbelly Corporation (PBPB - Free Report) .
Dollar Tree currently sports a Zacks Rank #1. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. The stock has gained 59.4% in the past year.
The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the corresponding year-ago period’s levels.
Designer Brands flaunts a Zacks Rank of 1 at present. DBI has a trailing four-quarter earnings surprise of 102.5%, on average. Shares of DBI have increased 0.5% in the past year.
The Zacks Consensus Estimate for Designer Brands’ 2023 sales and EPS suggests growth of 6.9% and 16.5%, respectively, from the comparable year-ago period.
Potbelly is currently Zacks #1 Ranked. PBPB has a trailing four-quarter earnings surprise of 26.2%, on average. Shares of PBPB have declined 21.5% in the past year.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 14.6% and 94.2%, respectively, from the corresponding year-ago period’s levels.
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Chipotle (CMG) Stock Up on Q2 Earnings Beat & Robust Outlook
Chipotle Mexican Grill, Inc. (CMG - Free Report) reported second-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, the top and the bottom lines increased on a year-over-year basis. Following the solid results, shares of the company appreciated 8.6% during the after-hours trading session on Jul 26 as the company provided a robust outlook for third-quarter 2022.
Q2 Earnings & Revenue Discussion
During second-quarter 2022, adjusted earnings of $9.30 per share beat the Zacks Consensus Estimate of $9.03 by 1.2%. The bottom line improved 24.7% from $7.46 reported in the year-ago quarter.
Quarterly revenues of $2,213.3 million missed the consensus mark of $2,244 million. The top line increased 17% on a year-over-year basis. The upside can primarily be attributed to robust comparable restaurant sales and new restaurant openings. In the quarter under review, Chipotle opened 42 new restaurants, taking the total restaurant count to 3,052.
Digital sales contributed 39% to sales during the quarter. During the second quarter, comparable restaurant sales increased 10.1% year over year, following growth of 9% (in first-quarter 2022), 15.2% (in fourth-quarter 2021), 15.1% (third-quarter 2021), 31.2% (second-quarter 2021), 17.2% (first-quarter 2021) and 5.7% (fourth-quarter 2020).
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
Chipotle Mexican Grill, Inc. price-consensus-eps-surprise-chart | Chipotle Mexican Grill, Inc. Quote
Costs, Operating Highlights & Net Income
During second-quarter 2022, food, beverage and packaging costs, as a percentage of revenues, remained flat year over year to 30.4%. In the second quarter of 2022, the benefit of menu price increases was overshadowed by higher costs for avocados, packaging, dairy, beef and chicken.
During the reported quarter, restaurant-level operating margin came in at 25.2%, down from 24.5% in the year-ago quarter. The increase was primarily due to the benefit of menu price increases and lower delivery fees. But it was overshadowed by higher food costs and increases in hourly wages.
Adjusted net income in the reported quarter amounted to $261.2 million compared with $212.8 million in the prior-year quarter.
Balance Sheet
Chipotle continues to impress investors with a solid financial position. As of Jun 30, the company reported cash and cash equivalent of $520.9 million compared with $815.4 million as of Dec 31, 2021
Inventory totaled $29.5 million as of Jun 30, 2022 compared with $32.8 million as of Dec 31, 2021. Goodwill (as a percentage of total assets) came in at 0.3% at the end of second-quarter 2022.
During the second quarter, the company repurchased $261.1 million worth of stocks at an average price of $1,350. As of Jun 30, the company had approximately $319.7 million available for the buyback program.
Outlook
For the third quarter, the company expects comps growth, including planned price increases in August, in the mid to high-single digits.
In 2022, the company expects to open 235 to 250 new restaurants. It expects 2022 tax rate in the range of 25-27%.
Zacks Rank & Key Picks
Chipotle carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Dollar Tree Inc. (DLTR - Free Report) , Designer Brands Inc. (DBI - Free Report) and Potbelly Corporation (PBPB - Free Report) .
Dollar Tree currently sports a Zacks Rank #1. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. The stock has gained 59.4% in the past year.
The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the corresponding year-ago period’s levels.
Designer Brands flaunts a Zacks Rank of 1 at present. DBI has a trailing four-quarter earnings surprise of 102.5%, on average. Shares of DBI have increased 0.5% in the past year.
The Zacks Consensus Estimate for Designer Brands’ 2023 sales and EPS suggests growth of 6.9% and 16.5%, respectively, from the comparable year-ago period.
Potbelly is currently Zacks #1 Ranked. PBPB has a trailing four-quarter earnings surprise of 26.2%, on average. Shares of PBPB have declined 21.5% in the past year.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 14.6% and 94.2%, respectively, from the corresponding year-ago period’s levels.