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Chipotle Q3 Earnings Top, Revenues Lag Estimates, Stock Down 5%
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Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) declined 5.3% in the after-hour trading session yesterday after the company reported mixed third-quarter results. The company’s earnings beat the Zacks Consensus Estimate for the seventh consecutive quarter but revenues missed the same after beating in the preceding four quarters.
However, both top and bottom lines increased year over year. The company benefited from new restaurant openings and a rise in comparable restaurant sales. Higher transactions and an increase in average check aided the company’s performance.
CMG’s Q3 Earnings & Revenue Discussion
In the quarter under review, CMG reported adjusted earnings per share (EPS) of 27 cents, outpacing the Zacks Consensus Estimate of 25 cents. The bottom line increased 17.4% from 23 cents reported in the year-ago quarter.
Quarterly revenues of $2,793.6 million missed the consensus mark of $2,817 million. However, the top line rose 13% on a year-over-year basis. This upside was driven by strong comparable restaurant sales growth backed by higher transactions of 3.3% as well as 2.7% rise in average check.
Comparable restaurant sales in the third quarter rose 6% compared with 11.1% growth in the previous quarter. Our estimate was pegged at 6.5%. Digital sales contributed 34% to total food and beverage revenues.
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
Strength in new restaurant openings aided the company’s performance in the third quarter. In the reported quarter, Chipotle opened 86 new restaurants in 73 locations, including a Chipotlane. It also opened an international licensed restaurant.
Record-breaking openings in new markets in Canada further supported growth. Next month, the company is set to surpass the milestone of 50 restaurants in Canada, reflecting substantial growth. Unit-level economics and returns in Canada remain comparable to those in the United States, supporting continued expansion efforts, with plans to further accelerate growth in Canada in 2025.
CMG’s Costs, Operating Highlights & Net Income
In the third quarter of 2024, food, beverage and packaging costs, as a percentage of revenues, came in at 30.6% compared with 29.7% reported in the prior-year quarter. The rise in costs was driven by inflation impacting various ingredients, especially avocados and dairy, along with increased ingredient usage aimed at delivering consistent, generous portions. Additionally, a shift in protein mix, spurred by the popularity of the Smoked Brisket limited-time offering, contributed to the cost uptick. This was partly offset by the positive impact of menu price hikes from the previous year. We expected the metric to be 30.7%.
In the quarter under discussion, the restaurant-level operating margin reached 25.5%, down from 26.3% reported in the prior-year period. We predicted the metric to be 25.4%.
Adjusted net income in the reported quarter amounted to $366.6 million, up 16.6% year over year. Our estimate for the metric was $341.1 million.
Balance Sheet of Chipotle
As of Sept. 30, 2024, the company reported cash and cash equivalents of $698.5 million compared with $560.6 million as of Dec. 31, 2023.
As of Sept. 30, 2024, inventory totaled $49.8 million compared with $39.3 million as of Dec. 31, 2023. Goodwill (as a percentage of total assets) reached 0.3% at the end of the third quarter of 2024.
CMG’s Outlook
For 2024, management continues to expect comps growth in the mid to high-single-digit range.
CMG anticipates to open 285-315 new restaurants in 2024. It expects tax rate in the range of 24-26% in 2024.
For 2025, management expects to open between 315 and 345 new company-operated restaurants, with more than 80% featuring a Chipotlane drive-thru.
Zacks Rank & Key Picks
Chipotle currently carries a Zacks Rank #3 (Hold).
CAVA has a trailing four-quarter earnings surprise of 257.7%, on average. The stock has surged 336.8% in the past year. The Zacks Consensus Estimate for CAVA’s 2024 sales and EPS indicates a rise of 29.1% and 104.8%, respectively, from the year-ago period’s levels.
Boot Barn Holdings, Inc. (BOOT - Free Report) sports a Zacks Rank of 1. BOOT has a trailing four-quarter earnings surprise of 6.8%, on average. The stock has risen 86.2% in the past year.
The consensus estimate for BOOT’s fiscal 2025 sales and EPS indicates growth of 12.1% and 10.9%, respectively, from the year-ago period’s levels.
ANF has a trailing four-quarter earnings surprise of 28%, on average. The stock has surged 127.7% in the past year. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and EPS indicates growth of 13% and 63.4%, respectively, from the year-ago period’s levels.
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Chipotle Q3 Earnings Top, Revenues Lag Estimates, Stock Down 5%
Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) declined 5.3% in the after-hour trading session yesterday after the company reported mixed third-quarter results. The company’s earnings beat the Zacks Consensus Estimate for the seventh consecutive quarter but revenues missed the same after beating in the preceding four quarters.
However, both top and bottom lines increased year over year. The company benefited from new restaurant openings and a rise in comparable restaurant sales. Higher transactions and an increase in average check aided the company’s performance.
CMG’s Q3 Earnings & Revenue Discussion
In the quarter under review, CMG reported adjusted earnings per share (EPS) of 27 cents, outpacing the Zacks Consensus Estimate of 25 cents. The bottom line increased 17.4% from 23 cents reported in the year-ago quarter.
Quarterly revenues of $2,793.6 million missed the consensus mark of $2,817 million. However, the top line rose 13% on a year-over-year basis. This upside was driven by strong comparable restaurant sales growth backed by higher transactions of 3.3% as well as 2.7% rise in average check.
Comparable restaurant sales in the third quarter rose 6% compared with 11.1% growth in the previous quarter. Our estimate was pegged at 6.5%. Digital sales contributed 34% to total food and beverage revenues.
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
Chipotle Mexican Grill, Inc. price-consensus-eps-surprise-chart | Chipotle Mexican Grill, Inc. Quote
Chipotle’s Restaurant Openings
Strength in new restaurant openings aided the company’s performance in the third quarter. In the reported quarter, Chipotle opened 86 new restaurants in 73 locations, including a Chipotlane. It also opened an international licensed restaurant.
Record-breaking openings in new markets in Canada further supported growth. Next month, the company is set to surpass the milestone of 50 restaurants in Canada, reflecting substantial growth. Unit-level economics and returns in Canada remain comparable to those in the United States, supporting continued expansion efforts, with plans to further accelerate growth in Canada in 2025.
CMG’s Costs, Operating Highlights & Net Income
In the third quarter of 2024, food, beverage and packaging costs, as a percentage of revenues, came in at 30.6% compared with 29.7% reported in the prior-year quarter. The rise in costs was driven by inflation impacting various ingredients, especially avocados and dairy, along with increased ingredient usage aimed at delivering consistent, generous portions. Additionally, a shift in protein mix, spurred by the popularity of the Smoked Brisket limited-time offering, contributed to the cost uptick. This was partly offset by the positive impact of menu price hikes from the previous year. We expected the metric to be 30.7%.
In the quarter under discussion, the restaurant-level operating margin reached 25.5%, down from 26.3% reported in the prior-year period. We predicted the metric to be 25.4%.
Adjusted net income in the reported quarter amounted to $366.6 million, up 16.6% year over year. Our estimate for the metric was $341.1 million.
Balance Sheet of Chipotle
As of Sept. 30, 2024, the company reported cash and cash equivalents of $698.5 million compared with $560.6 million as of Dec. 31, 2023.
As of Sept. 30, 2024, inventory totaled $49.8 million compared with $39.3 million as of Dec. 31, 2023. Goodwill (as a percentage of total assets) reached 0.3% at the end of the third quarter of 2024.
CMG’s Outlook
For 2024, management continues to expect comps growth in the mid to high-single-digit range.
CMG anticipates to open 285-315 new restaurants in 2024. It expects tax rate in the range of 24-26% in 2024.
For 2025, management expects to open between 315 and 345 new company-operated restaurants, with more than 80% featuring a Chipotlane drive-thru.
Zacks Rank & Key Picks
Chipotle currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail – Restaurants industry are:
CAVA Group, Inc. (CAVA - Free Report) sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CAVA has a trailing four-quarter earnings surprise of 257.7%, on average. The stock has surged 336.8% in the past year. The Zacks Consensus Estimate for CAVA’s 2024 sales and EPS indicates a rise of 29.1% and 104.8%, respectively, from the year-ago period’s levels.
Boot Barn Holdings, Inc. (BOOT - Free Report) sports a Zacks Rank of 1. BOOT has a trailing four-quarter earnings surprise of 6.8%, on average. The stock has risen 86.2% in the past year.
The consensus estimate for BOOT’s fiscal 2025 sales and EPS indicates growth of 12.1% and 10.9%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) presently carries a Zacks Rank #2 (Buy).
ANF has a trailing four-quarter earnings surprise of 28%, on average. The stock has surged 127.7% in the past year. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and EPS indicates growth of 13% and 63.4%, respectively, from the year-ago period’s levels.