We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Chipotle (CMG) Q3 Earnings & Revenues Miss; Stock Down
Read MoreHide Full Article
Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) declined over 2% in afterhours trading on Oct 25, after the company reported lower-than-expected third-quarter results.
Earnings and Revenue Discussion
Adjusted earnings of 79 cents per share missed the Zacks Consensus Estimate of $1.58 by 50%. Earnings also decreased considerably from the year-ago quarter figure of $4.59 due to a substantial decline in revenues.
FindTheCompany | GraphiqRevenues plunged 14.8% to $1.04 billion because of lower comps and missed the Zacks Consensus Estimate of $1.09 billion by 4.6%.
Despite various food-safety initiatives, the company’s third-quarter results continued to be affected by the negative publicity associated with the E. coli and norovirus outbreaks in several states, which surfaced toward the end of 2015.
Behind the Headline Numbers
Comps tumbled 21.9% in the 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 slightly better than the prior-quarter drop of 23.6%.
Meanwhile, food costs, as a percentage of revenues, increased 210 bps to 35.1% due to higher waste costs and avocado prices, somewhat offset by a relief in beef prices.
General and administrative expenses comprised 7.6% of the total revenue, reflecting an increase of 180 bps year over year, primarily due to sales deleverage.
Restaurant level operating margin was 14.1%, down a substantial 1420 bps from 28.3% recorded in the year-ago quarter. The decline was primarily due sales deleveraging, elevated food costs and higher-than-usual marketing and promotional costs.
For the fourth quarter, Chipotle expects comps to decline in the low single digits.
The company expects combined marketing and promo expenses to remain at the same levels in the fourth quarter as it plans to test television advertising to reach out a wider audience.
Meanwhile, for full-year 2016, Chipotle continues to expect 220–235 new restaurant openings.
Guidance for 2017
For full-year 2017, Chipotle expects adjusted earnings per share of $10.00 while comps are projected to increase in high single digits.
Also, the company predicts restaurant level operating margin of 20%. Meanwhile, new restaurant openings are anticipated in the range of 195–210.
The Zacks Consensus Estimate for Domino’s 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for 2016, EPS is expected to improve 22.8%.
Wingstop posted positive earnings surprises in all of the last four quarters, with an average beat of 15.46%. For 2016, EPS is expected to grow 18.1%.
Potbelly’s trailing four-quarter average earnings surprise stands at a positive 11.81%. For 2016, the company’s EPS is expected to increase 26.7%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Chipotle (CMG) Q3 Earnings & Revenues Miss; Stock Down
Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) declined over 2% in afterhours trading on Oct 25, after the company reported lower-than-expected third-quarter results.
Earnings and Revenue Discussion
Adjusted earnings of 79 cents per share missed the Zacks Consensus Estimate of $1.58 by 50%. Earnings also decreased considerably from the year-ago quarter figure of $4.59 due to a substantial decline in revenues.
Despite various food-safety initiatives, the company’s third-quarter results continued to be affected by the negative publicity associated with the E. coli and norovirus outbreaks in several states, which surfaced toward the end of 2015.
Behind the Headline Numbers
Comps tumbled 21.9% in the 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 slightly better than the prior-quarter drop of 23.6%.
Meanwhile, food costs, as a percentage of revenues, increased 210 bps to 35.1% due to higher waste costs and avocado prices, somewhat offset by a relief in beef prices.
General and administrative expenses comprised 7.6% of the total revenue, reflecting an increase of 180 bps year over year, primarily due to sales deleverage.
Restaurant level operating margin was 14.1%, down a substantial 1420 bps from 28.3% recorded in the year-ago quarter. The decline was primarily due sales deleveraging, elevated food costs and higher-than-usual marketing and promotional costs.
CHIPOTLE MEXICN Price, Consensus and EPS Surprise
CHIPOTLE MEXICN Price, Consensus and EPS Surprise | CHIPOTLE MEXICN Quote
Guidance
For the fourth quarter, Chipotle expects comps to decline in the low single digits.
The company expects combined marketing and promo expenses to remain at the same levels in the fourth quarter as it plans to test television advertising to reach out a wider audience.
Meanwhile, for full-year 2016, Chipotle continues to expect 220–235 new restaurant openings.
Guidance for 2017
For full-year 2017, Chipotle expects adjusted earnings per share of $10.00 while comps are projected to increase in high single digits.
Also, the company predicts restaurant level operating margin of 20%. Meanwhile, new restaurant openings are anticipated in the range of 195–210.
Zacks Rank & Stocks to Consider
Chipotle has a Zacks Rank #4 (Sell). Better-ranked stocks in this sector include Domino's Pizza, Inc. (DPZ - Free Report) , Wingstop Inc. (WING - Free Report) and Potbelly Corporation (PBPB - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Domino’s 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for 2016, EPS is expected to improve 22.8%.
Wingstop posted positive earnings surprises in all of the last four quarters, with an average beat of 15.46%. For 2016, EPS is expected to grow 18.1%.
Potbelly’s trailing four-quarter average earnings surprise stands at a positive 11.81%. For 2016, the company’s EPS is expected to increase 26.7%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>