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Chipotle (CMG) Stock Rises on Q1 Earnings & Revenue Beat
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Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) gained nearly 3% in afterhours trading on Apr 25, after the company reported better-than-expected results in first-quarter 2017.
Earnings and Revenue Discussion
Adjusted earnings of $1.60 per share surpassed the Zacks Consensus Estimate of $1.28 by 25%. Earnings also compared favorably with the year-ago quarter figure of a loss of 88 cents per share, given a substantial rise in revenues.
Revenues soared 28.1% to $1.07 billion primarily because of higher comps and also topped the Zacks Consensus Estimate of $1.05 billion by 1.6%.
Notably, in the quarter, the company’s sales finally bounced back from the massive food safety scandal related to the E.coli and norovirus outbreak, which surfaced toward 2015-end and resulted in sales plunging and hurting its reputation. Chipotle’s new brand-management efforts along with various sales-building initiatives aided the turnaround.
Behind the Headline Numbers
Comps increased 17.8% in the quarter. The improvement was mainly backed by improved customer traffic, reduced promotional activity and increased average check. Naturally, the comps rise compared favorably with the prior-quarter decline of 4.8%.
Meanwhile, food costs, as a percentage of revenues, decreased 150 bps to 33.8% mainly due to improvements in the company’s food handling procedures, somewhat offset by higher avocado prices.
General and administrative expenses comprised 6.5% of the total revenue, reflecting a decrease of 90 bps year over year.
Restaurant level operating margin was 17.7%, up a substantial 1090 bps from 6.8% recorded in the year-ago quarter. The upside was primarily driven by sales leverage, lower marketing and promotional spend, efficiencies in labor, and lesser food costs.
Guidance for 2017
Chipotle reiterated its previously announced guidance for full-year 2017 as comps are still projected to increase in high single digits. Meanwhile, new restaurant openings are anticipated in the range of 195–210.
It is also working toward its stretch goal of achieving adjusted earnings per share of $10.00 and restaurant level operating margin of 20% for the year.
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
Chipotle has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Restaurant Brands International Inc. (QSR - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Bob Evans Farms, Inc. . While Restaurant Brands sports a Zacks Rank #1 (Strong Buy), Darden and Bob Evans Farms carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Restaurant Brands’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 19.20%. Meanwhile, for 2017, EPS is expected to improve 14.9%.
The Zacks Consensus Estimate for Darden’s fiscal 2017 earnings climbed 1.8%, 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 3.35%.
The Zacks Consensus Estimate for Bob Evans Farms’ fiscal 2017 earnings climbed 1.3%, 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 12.74%.
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Chipotle (CMG) Stock Rises on Q1 Earnings & Revenue Beat
Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) gained nearly 3% in afterhours trading on Apr 25, after the company reported better-than-expected results in first-quarter 2017.
Earnings and Revenue Discussion
Adjusted earnings of $1.60 per share surpassed the Zacks Consensus Estimate of $1.28 by 25%. Earnings also compared favorably with the year-ago quarter figure of a loss of 88 cents per share, given a substantial rise in revenues.
Revenues soared 28.1% to $1.07 billion primarily because of higher comps and also topped the Zacks Consensus Estimate of $1.05 billion by 1.6%.
Notably, in the quarter, the company’s sales finally bounced back from the massive food safety scandal related to the E.coli and norovirus outbreak, which surfaced toward 2015-end and resulted in sales plunging and hurting its reputation. Chipotle’s new brand-management efforts along with various sales-building initiatives aided the turnaround.
Behind the Headline Numbers
Comps increased 17.8% in the quarter. The improvement was mainly backed by improved customer traffic, reduced promotional activity and increased average check. Naturally, the comps rise compared favorably with the prior-quarter decline of 4.8%.
Meanwhile, food costs, as a percentage of revenues, decreased 150 bps to 33.8% mainly due to improvements in the company’s food handling procedures, somewhat offset by higher avocado prices.
General and administrative expenses comprised 6.5% of the total revenue, reflecting a decrease of 90 bps year over year.
Restaurant level operating margin was 17.7%, up a substantial 1090 bps from 6.8% recorded in the year-ago quarter. The upside was primarily driven by sales leverage, lower marketing and promotional spend, efficiencies in labor, and lesser food costs.
Guidance for 2017
Chipotle reiterated its previously announced guidance for full-year 2017 as comps are still projected to increase in high single digits. Meanwhile, new restaurant openings are anticipated in the range of 195–210.
It is also working toward its stretch goal of achieving adjusted earnings per share of $10.00 and restaurant level operating margin of 20% for the year.
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise
Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise | Chipotle Mexican Grill, Inc. Quote
Zacks Rank & Stocks to Consider
Chipotle has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Restaurant Brands International Inc. (QSR - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Bob Evans Farms, Inc. . While Restaurant Brands sports a Zacks Rank #1 (Strong Buy), Darden and Bob Evans Farms carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Restaurant Brands’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 19.20%. Meanwhile, for 2017, EPS is expected to improve 14.9%.
The Zacks Consensus Estimate for Darden’s fiscal 2017 earnings climbed 1.8%, 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 3.35%.
The Zacks Consensus Estimate for Bob Evans Farms’ fiscal 2017 earnings climbed 1.3%, 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 12.74%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>