Chipotle Mexican Grill, Inc. (CMG Quick QuoteCMG - Free Report) released fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis. Earnings surpassed the consensus estimate for the fourth consecutive quarter.

Following the earnings release, shares of the company rose 2.9% during the after-hours trading session on Feb 6.

Q4 Earnings & Revenue Discussion

In the quarter under review, Chipotle reported adjusted earnings per share (EPS) of $10.36, outpacing the Zacks Consensus Estimate of $9.73. The bottom line improved 25% from $8.29 in the year-ago quarter.

Quarterly revenues of $2,516.3 million surpassed the consensus mark of $2,492 million. The top line jumped 15.4% on a year-over-year basis on the back of strong comparable restaurant sales growth and new restaurant openings. In the reported quarter, Chipotle opened 121 new restaurants with 110 locations including a Chipotlane.

Digital sales contributed 36.1% to total food and beverage revenues.

Comparable restaurant sales grew 7.9% year over year compared with 5% in the previous quarter. Our estimate was pegged at 6.3%.

Costs, Operating Highlights & Net Income

During fourth-quarter 2023, food, beverage and packaging costs, as a percentage of revenues, came in at 29.7%, up 40 basis points year over year. Increased cost across the board, most notably beef produce as well as queso, was marginally overshadowed by menu price increases and lower paper costs.  We suggested the metric to be 30%.

During the quarter under discussion, the restaurant-level operating margin reached 25.4%, up from 24% a year ago. The uptick was primarily driven by sales leverage. We predicted the metric to be 23.9%.

Adjusted net income in the reported quarter amounted to $286.2 million, up 23.7% year over year.

Balance Sheet

As of Dec 31, 2023, the company reported cash and cash equivalents of $560.3 million compared with $384 million as of Dec 31, 2022.

As of Dec 31, 2023, inventory totaled $39.3 million compared with $35.7 million as of Dec 31, 2022. Goodwill (as a percentage of total assets) reached 0.3% at the end of the fourth quarter of 2023.

During the fourth quarter, CMG repurchased $144.3 million worth of stock at an average price of $1,938.8.

Outlook

For 2024, management expects comps growth in the mid-single-digit range.

CMG anticipates to open 285-315 new restaurants in 2024. It suggests 2024 tax rate in the range of 25-27%.

Zacks Rank

Chipotle currently carries a Zacks Rank #3 (Hold).

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Below, we present some better-ranked stocks in the Zacks Retail-Restaurants industry.

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The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS suggests a rise of 12.8% and 14.3%, respectively, from the prior-year levels.