Yahoo Finance Why Is Chipotle (CMG) Up 2.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Chipotle Mexican Grill (CMG). Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Chipotle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Chipotle Q1 Earnings & Revenues Top Estimates, Rise Y/Y
Chipotle reported first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Q1 Earnings & Revenue Discussion
In the quarter under review, Chipotle reported adjusted earnings per share (EPS) of $10.50, beating the Zacks Consensus Estimate of $8.89. The bottom line increased 84.2% from the $5.70 reported in the year-ago quarter.
Quarterly revenues of $2,368.6 million beat the consensus mark of $2,337 million. The top line increased 17.2% on a year-over-year basis. The upside can primarily be attributed to strong comparable restaurant sales growth and new restaurant openings. In the quarter under review, Chipotle opened 41 new restaurants.
Digital sales contributed 39.3% to total food and beverage revenues. During the first quarter, comparable restaurant sales increased 10.9% year over year, following growth of 5.6% (in fourth-quarter 2022), 7.6% (in third-quarter 2022), 10.1% (in second-quarter 2022) and 9% (in first-quarter 2022).
Costs, Operating Highlights & Net Income
During first-quarter 2023, food, beverage and packaging costs, as a percentage of revenues, came in at 29.2%, down 180 basis points (bps) year over year. The cost improvement was backed by menu price increases and lower avocado prices. This was partially offset by higher costs in dairy, tortillas, salsa, beans and rice.
During the reported quarter, the restaurant-level operating margin came in at 25.6%, up from 20.7% reported in the year-ago quarter. The uptick was primarily backed by sales leverage benefits, lower avocado prices and lower delivery fees. However, this was partially offset by wage inflation and higher food costs.
Adjusted net income in the reported quarter amounted to $291.6 million compared with $161.4 reported million in the prior-year quarter.
Balance Sheet
As of Mar 31, 2023, the company reported cash and cash equivalent of $409.7 million compared with $384 million as of Dec 31, 2022.
Inventory totaled $34.6 million as of Mar 31, 2023, compared with $35.7 million as of Dec 31, 2022. Goodwill (as a percentage of total assets) came in at 0.3% at the end of the first quarter of 2023.
During the first quarter, the company repurchased $131.6 million worth of stock at an average price of $1,552.9. As of Mar 31, the company had approximately $282.3 million available for the buyback program.
2023 Outlook
For second-quarter and full-year 2023, the company expects comps growth in the mid to high-single digit range.
The company expects to open 255 to 285 new restaurants in 2023. It expects a 2023 tax rate in the range of 25-27%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 6.54% due to these changes.
VGM Scores
At this time, Chipotle has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Chipotle has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
