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Why Is Chipotle (CMG) Down 6.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Chipotle Mexican Grill (CMG - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Chipotle due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Chipotle Q4 Earnings Top Estimates, Revenues Lag
Chipotle posted fourth-quarter 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
The company remains cautious of higher costs of raw materials (including avocados) and potential tariffs on Mexican imports. If the recently announced tariffs go into full effect, they could impose an ongoing impact of about 60 basis points on the company's cost of sales, potentially adding further margin pressures.
Chipotle’s Q4 Earnings & Revenue Discussion
In the quarter under review, Chipotle reported adjusted earnings per share (EPS) of 25 cents, outpacing the Zacks Consensus Estimate of 24 cents. The bottom line increased 19% from 21 cents reported in the year-ago quarter.
Quarterly revenues of $2.8 billion missed the consensus mark by 0.2%. However, the top line rose 13.1% on a year-over-year basis. This upside was driven by new restaurant openings and strong comparable restaurant sales growth.
Comparable restaurant sales in the fourth quarter rose 5.4% compared with 6% growth in the previous quarter. During the quarter, comps were backed by higher transactions of 4% as well as a 1.4% rise in average checks.
During the fourth quarter, digital sales contributed 34.4% to total food and beverage revenues.
Chipotle’s Restaurant Openings
Strength in new restaurant openings aided the company’s performance in the fourth quarter. In the reported quarter, Chipotle opened 119 new restaurants in 95 locations, including a Chipotlane. It also opened an internationally licensed restaurant.
Chipotle’s Costs, Operating Highlights & Net Income
In the fourth quarter of 2024, food, beverage and packaging costs, as a percentage of revenues, came in at 30.4% compared with 29.7% reported in the prior-year quarter. The rise in costs was driven by inflationary costs across avocados and dairy and 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.
In the quarter under discussion, the restaurant-level operating margin reached 24.8%, down from 25.4% reported in the prior-year period.
Adjusted net income in the reported quarter amounted to $340 million, up 18.8% year over year.
Balance Sheet of Chipotle
As of Dec. 31, 2024, the company reported cash and cash equivalents of $748.5 million compared with $560.6 million as of Dec. 31, 2023.
As of Dec. 31, 2024, inventory totaled $48.9 million compared with $39.3 million as of Dec. 31, 2023. Goodwill (as a percentage of total assets) reached 0.23% at the end of the fourth quarter of 2024.
Chipotle’s 2024 Highlights
Total revenues in 2024 amounted to $11.3 billion compared with $9.87 billion in 2023.
Adjusted net income in 2024 came in at $1.54 billion compared with $1.24 billion reported in 2023.
In 2024, adjusted diluted EPS came in at $1.12 compared with 90 cents reported in the previous year.
Chipotle’s 2025 Outlook
For 2025, management continues to expect comps growth in the low to mid-single-digit range. Management expects to open between 315 and 345 new company-operated restaurants in 2025, with more than 80% featuring a Chipotlane. It expects a tax rate in the range of 25-27% in 2025.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.52% due to these changes.
VGM Scores
At this time, Chipotle has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Chipotle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Chipotle (CMG) Down 6.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Chipotle Mexican Grill (CMG - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Chipotle due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Chipotle Q4 Earnings Top Estimates, Revenues Lag
Chipotle posted fourth-quarter 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
The company remains cautious of higher costs of raw materials (including avocados) and potential tariffs on Mexican imports. If the recently announced tariffs go into full effect, they could impose an ongoing impact of about 60 basis points on the company's cost of sales, potentially adding further margin pressures.
Chipotle’s Q4 Earnings & Revenue Discussion
In the quarter under review, Chipotle reported adjusted earnings per share (EPS) of 25 cents, outpacing the Zacks Consensus Estimate of 24 cents. The bottom line increased 19% from 21 cents reported in the year-ago quarter.
Quarterly revenues of $2.8 billion missed the consensus mark by 0.2%. However, the top line rose 13.1% on a year-over-year basis. This upside was driven by new restaurant openings and strong comparable restaurant sales growth.
Comparable restaurant sales in the fourth quarter rose 5.4% compared with 6% growth in the previous quarter. During the quarter, comps were backed by higher transactions of 4% as well as a 1.4% rise in average checks.
During the fourth quarter, digital sales contributed 34.4% to total food and beverage revenues.
Chipotle’s Restaurant Openings
Strength in new restaurant openings aided the company’s performance in the fourth quarter. In the reported quarter, Chipotle opened 119 new restaurants in 95 locations, including a Chipotlane. It also opened an internationally licensed restaurant.
Chipotle’s Costs, Operating Highlights & Net Income
In the fourth quarter of 2024, food, beverage and packaging costs, as a percentage of revenues, came in at 30.4% compared with 29.7% reported in the prior-year quarter. The rise in costs was driven by inflationary costs across avocados and dairy and 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.
In the quarter under discussion, the restaurant-level operating margin reached 24.8%, down from 25.4% reported in the prior-year period.
Adjusted net income in the reported quarter amounted to $340 million, up 18.8% year over year.
Balance Sheet of Chipotle
As of Dec. 31, 2024, the company reported cash and cash equivalents of $748.5 million compared with $560.6 million as of Dec. 31, 2023.
As of Dec. 31, 2024, inventory totaled $48.9 million compared with $39.3 million as of Dec. 31, 2023. Goodwill (as a percentage of total assets) reached 0.23% at the end of the fourth quarter of 2024.
Chipotle’s 2024 Highlights
Total revenues in 2024 amounted to $11.3 billion compared with $9.87 billion in 2023.
Adjusted net income in 2024 came in at $1.54 billion compared with $1.24 billion reported in 2023.
In 2024, adjusted diluted EPS came in at $1.12 compared with 90 cents reported in the previous year.
Chipotle’s 2025 Outlook
For 2025, management continues to expect comps growth in the low to mid-single-digit range. Management expects to open between 315 and 345 new company-operated restaurants in 2025, with more than 80% featuring a Chipotlane. It expects a tax rate in the range of 25-27% in 2025.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.52% due to these changes.
VGM Scores
At this time, Chipotle has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Chipotle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.