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Chipotle (CMG) Slips on Weak Earnings, Comps Fall 21.9%

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Chipotle Mexican Grill (CMG - Free Report) ) just released its third quarter fiscal 2016 financial results, posting earnings of 79 cents per share (accounting for non-stock based compensation and before non-recurring items) and revenue of $1.0 billion. CMG is a Zacks Rank #4 (Sell), and is down 1.86% to $405.67 per share in after-hours trading shortly after its earnings report was released.

Missed earnings estimates. The company reported adjusted earnings of 79 cents per share, not even coming close to the Zacks Consensus Estimate of $1.58 per share. This number excludes 52 cents from non-recurring items.

Missed revenue estimates. The company saw revenue figures of $1.0 billion, lagging behind our consensus estimate of $1.088 billion and decreasing 14.8% year-over-year.  The decline in revenue was driven by poor comparable restaurant sales.

Comparable restaurant transactions decreased 15.2% while comparable restaurant sales fell 21.9%, including a 0.8% decrease from a revenue deferral related to unredeemed Chiptopia awards. Chipotle blamed the decline in comps on the fall in the number of transactions at its restaurants, and also a decline in average check.

Chipotle opened 54 new restaurants, net of one closure, which brings the total restaurant count to 2,178.

For Q4, Chipotle management expects comparable restaurant sales to decline in the low single-digits.

Here’s a graph that looks at Chipotle’s price, consensus, and EPS surprise:

CHIPOTLE MEXICN Price, Consensus and EPS Surprise

CHIPOTLE MEXICN Price, Consensus and EPS Surprise | CHIPOTLE MEXICN Quote

Chipotle offers a focused menu of burritos, tacos, burrito bowls and salads made from fresh, high-quality raw ingredients, prepared using classic cooking methods and served in a distinctive atmosphere. Through its vision of Food with Integrity, Chipotle is seeking better food not only from a variety of fresh ingredients, but ingredients that are sustainably grown and naturally raised with respect for the animals, the land, and the farmers who produce the food.

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