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Chipotle's (CMG) Q3 Earnings Beat Estimates, Revenues Lag
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Chipotle Mexican Grill, Inc. (CMG - Free Report) reported third-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 results, shares of the company declined 1.2% during the after-hours trading session on Oct 25.
Q3 Earnings & Revenue Discussion
During third-quarter 2022, adjusted earnings of $9.51 per share beat the Zacks Consensus Estimate of $9.11 by 4.4%. The bottom line improved 35.5% from the $7.02 reported in the year-ago quarter.
Quarterly revenues of $2,220.2 million missed the consensus mark of $2,233 million. The top line increased 13.7% 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 43 new restaurants.
Digital sales contributed 37.2% of total food and beverage revenues. During the third quarter, comparable restaurant sales increased 7.6% year over year, following growth of 10.1% (in second-quarter 2022), 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 third-quarter 2022, food, beverage and packaging costs, as a percentage of revenues, came in at 29.8%, down 50 bps year over year. In the third quarter of 2022, the benefit of menu price increases was overshadowed by inflation across the menu, mainly due to higher costs for dairy, packaging, tortillas and avocados.
During the reported quarter, the restaurant-level operating margin came in at 25.3%, up from 23.5% 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 $265.8 million compared with $199.8 million in the prior-year quarter.
Balance Sheet
As of Sep 30, the company reported cash and cash equivalent of $366.6 million compared with $815.4 million as of Dec 31, 2021.
Inventory totaled $33.8 million as of Sep 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 the third quarter of 2022.
During the third quarter, the company repurchased $106.9 million worth of stocks at an average price of $1,437.87.
Outlook
For the fourth quarter, the company expects comps growth in the range of mid to high-single-digit.
In 2022, the company expects to open 235 to 250 new restaurants. It expects a 2022 tax rate in the range of 25-27%.
In 2023, the company expects to open 255 to 285 new restaurants.
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The Zacks Consensus Estimate for CBRL’s 2023 sales and earnings per share (EPS) suggests growth of 6.4% and 5.4%, respectively, from the year-ago period’s levels.
Yum China carries a Zacks Rank #2 at present. Yum China has a long-term earnings growth of 10%. Shares of the company have declined 30.3% in the past year.
The Zacks Consensus Estimate for Yum China's 2023 sales and EPS suggests growth of 19.9% and 86.8%, respectively, from the year-ago period’s levels.
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The Zacks Consensus Estimate for Sprouts Farmers Market’s 2023 sales and EPS suggests growth of 5.9% and 7.9%, respectively, from the year-ago period’s levels.
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Chipotle's (CMG) Q3 Earnings Beat Estimates, Revenues Lag
Chipotle Mexican Grill, Inc. (CMG - Free Report) reported third-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 results, shares of the company declined 1.2% during the after-hours trading session on Oct 25.
Q3 Earnings & Revenue Discussion
During third-quarter 2022, adjusted earnings of $9.51 per share beat the Zacks Consensus Estimate of $9.11 by 4.4%. The bottom line improved 35.5% from the $7.02 reported in the year-ago quarter.
Quarterly revenues of $2,220.2 million missed the consensus mark of $2,233 million. The top line increased 13.7% 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 43 new restaurants.
Digital sales contributed 37.2% of total food and beverage revenues. During the third quarter, comparable restaurant sales increased 7.6% year over year, following growth of 10.1% (in second-quarter 2022), 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 third-quarter 2022, food, beverage and packaging costs, as a percentage of revenues, came in at 29.8%, down 50 bps year over year. In the third quarter of 2022, the benefit of menu price increases was overshadowed by inflation across the menu, mainly due to higher costs for dairy, packaging, tortillas and avocados.
During the reported quarter, the restaurant-level operating margin came in at 25.3%, up from 23.5% 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 $265.8 million compared with $199.8 million in the prior-year quarter.
Balance Sheet
As of Sep 30, the company reported cash and cash equivalent of $366.6 million compared with $815.4 million as of Dec 31, 2021.
Inventory totaled $33.8 million as of Sep 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 the third quarter of 2022.
During the third quarter, the company repurchased $106.9 million worth of stocks at an average price of $1,437.87.
Outlook
For the fourth quarter, the company expects comps growth in the range of mid to high-single-digit.
In 2022, the company expects to open 235 to 250 new restaurants. It expects a 2022 tax rate in the range of 25-27%.
In 2023, the company expects to open 255 to 285 new restaurants.
Zacks Rank & Other Key Picks
Chipotle currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the Zacks Retail-Wholesale sector are Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) , Yum China Holdings, Inc. (YUMC - Free Report) and Sprouts Farmers Market, Inc. (SFM - Free Report) .
Cracker Barrel currently carries a Zacks Rank #2. It has a long-term earnings growth of 4.3%. Shares of the company have declined 17.4% in the past year.
The Zacks Consensus Estimate for CBRL’s 2023 sales and earnings per share (EPS) suggests growth of 6.4% and 5.4%, respectively, from the year-ago period’s levels.
Yum China carries a Zacks Rank #2 at present. Yum China has a long-term earnings growth of 10%. Shares of the company have declined 30.3% in the past year.
The Zacks Consensus Estimate for Yum China's 2023 sales and EPS suggests growth of 19.9% and 86.8%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 15.6%, on average. Shares of the company have improved 26.4% in the past year.
The Zacks Consensus Estimate for Sprouts Farmers Market’s 2023 sales and EPS suggests growth of 5.9% and 7.9%, respectively, from the year-ago period’s levels.