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Chipotle (CMG) Tops Q4 Earnings Estimate, Revenues in Line
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Chipotle Mexican Grill, Inc. (CMG - Free Report) reported fourth-quarter 2016 adjusted earnings of 55 cents per share, which surpassed the Zacks Consensus Estimate of 54 cents by 1.9%. However, earnings compared unfavorably with the year-ago quarter figure of $2.17.
Revenues increased 3.7% to $1.03 billion on the back of new restaurant openings, partially offset by lower comps. Meanwhile, revenues were almost in line with the Zacks Consensus Estimate of $1.033 billion.
Though the company is already on the road to recovery, it will take some time to completely restore the economic model as well as customer confidence following the negative publicity associated with the E. coli and norovirus outbreaks in several states, which surfaced around 2015 end.
Going forward, Chipotle intends to continue simplifying and improving restaurant operations, make use of creative marketing to rebuild its brand, press on the roll-out of its digital sales efforts in order to improve guest experience, and reinstate customer affinity for the Chipotle brand.
Behind the Headline Numbers
Though comps witnessed an increase of 14.7% for the month of December, it declined 4.8% for the full quarter. The decline was mainly due to a lower number of transactions in the company’s restaurants and to a certain extent, lower average check. However, the comps decline was much better than the prior-quarter drop of 21.9%. Also, comps benefitted from the soft year-over-year comparison.
Meanwhile, food costs, as a percentage of revenues, increased 150 bps to 35.3% due to higher avocado prices and increased expense for pre-diced tomatoes, somewhat offset by a decline in beef prices.
General and administrative expenses comprised 6.3% of the total revenue, reflecting an increase of 160 bps year over year.
Restaurant level operating margin was 13.5%, down a substantial 610 bps from 19.6% recorded in the year-ago quarter. The decline was primarily due sales deleveraging, elevated food costs, and higher-than-usual marketing and promotional costs.
2016 Results
Chipotle’s full-year adjusted earnings of 77 cents missed the Zacks Consensus Estimate of $1.29 by 40.3%. In addition, it decreased substantially from the year-ago quarter figure of $15.10. The downside reflects a decline in revenues.
Full-year revenues of $3.90 billion slightly missed the Zacks Consensus Estimate of $3.91 billion and declined 13.3% year over year.
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
Chipotle reiterated its previously announced guidance for the full year and continues to expect adjusted earnings per share of $10.00, while comps are still projected to increase in high single digits.
Also, the company continues to predict restaurant-level operating margin of 20%. Meanwhile, new restaurant openings are anticipated in the range of 195 to 210.
Zacks Rank & Stocks to Consider
Chipotle has a Zacks Rank #4 (Sell). Some better-ranked stocks in this sector include Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , Wingstop Inc. (WING - Free Report) and Papa John's International Inc. (PZZA - Free Report) . While Dave & Buster's and Wingstop sport a Zacks Rank #1 (Strong Buy), Papa John's carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dave & Buster's fiscal 2017 earnings climbed 6.2% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 37.81%.
Wingstop’s posted positive earnings surprise in each of the last four quarters, with an average beat of 11.99%. Meanwhile, for 2016, EPS is expected to improve 21.3%.
Papa John’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 11.31%. Further, for 2016, EPS is expected to grow 20.3%.
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Chipotle (CMG) Tops Q4 Earnings Estimate, Revenues in Line
Chipotle Mexican Grill, Inc. (CMG - Free Report) reported fourth-quarter 2016 adjusted earnings of 55 cents per share, which surpassed the Zacks Consensus Estimate of 54 cents by 1.9%. However, earnings compared unfavorably with the year-ago quarter figure of $2.17.
Revenues increased 3.7% to $1.03 billion on the back of new restaurant openings, partially offset by lower comps. Meanwhile, revenues were almost in line with the Zacks Consensus Estimate of $1.033 billion.
Though the company is already on the road to recovery, it will take some time to completely restore the economic model as well as customer confidence following the negative publicity associated with the E. coli and norovirus outbreaks in several states, which surfaced around 2015 end.
Going forward, Chipotle intends to continue simplifying and improving restaurant operations, make use of creative marketing to rebuild its brand, press on the roll-out of its digital sales efforts in order to improve guest experience, and reinstate customer affinity for the Chipotle brand.
Behind the Headline Numbers
Though comps witnessed an increase of 14.7% for the month of December, it declined 4.8% for the full quarter. The decline was mainly due to a lower number of transactions in the company’s restaurants and to a certain extent, lower average check. However, the comps decline was much better than the prior-quarter drop of 21.9%. Also, comps benefitted from the soft year-over-year comparison.
Meanwhile, food costs, as a percentage of revenues, increased 150 bps to 35.3% due to higher avocado prices and increased expense for pre-diced tomatoes, somewhat offset by a decline in beef prices.
General and administrative expenses comprised 6.3% of the total revenue, reflecting an increase of 160 bps year over year.
Restaurant level operating margin was 13.5%, down a substantial 610 bps from 19.6% recorded in the year-ago quarter. The decline was primarily due sales deleveraging, elevated food costs, and higher-than-usual marketing and promotional costs.
2016 Results
Chipotle’s full-year adjusted earnings of 77 cents missed the Zacks Consensus Estimate of $1.29 by 40.3%. In addition, it decreased substantially from the year-ago quarter figure of $15.10. The downside reflects a decline in revenues.
Full-year revenues of $3.90 billion slightly missed the Zacks Consensus Estimate of $3.91 billion and declined 13.3% year over year.
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise | Chipotle Mexican Grill, Inc. Quote
Guidance for 2017
Chipotle reiterated its previously announced guidance for the full year and continues to expect adjusted earnings per share of $10.00, while comps are still projected to increase in high single digits.
Also, the company continues to predict restaurant-level operating margin of 20%. Meanwhile, new restaurant openings are anticipated in the range of 195 to 210.
Zacks Rank & Stocks to Consider
Chipotle has a Zacks Rank #4 (Sell). Some better-ranked stocks in this sector include Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , Wingstop Inc. (WING - Free Report) and Papa John's International Inc. (PZZA - Free Report) . While Dave & Buster's and Wingstop sport a Zacks Rank #1 (Strong Buy), Papa John's carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dave & Buster's fiscal 2017 earnings climbed 6.2% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 37.81%.
Wingstop’s posted positive earnings surprise in each of the last four quarters, with an average beat of 11.99%. Meanwhile, for 2016, EPS is expected to improve 21.3%.
Papa John’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 11.31%. Further, for 2016, EPS is expected to grow 20.3%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>