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Chipotle (CMG) Q1 Earnings & Revenues Top Estimates, Stock Up

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Chipotle Mexican Grill, Inc. CMG reported solid first-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. The top and the bottom lines increased on a year-over-year basis. Following the solid results, shares of the company appreciated 3.9% during the after-hours trading session on Apr 26.

Q1 Earnings & Revenue Discussion

During first-quarter 2022, adjusted earnings of $5.70 per share beat the Zacks Consensus Estimate of $5.63 by 1.2%. The bottom line improved 6.3% from $5.36 reported in the year-ago quarter.

Quarterly revenues of $2,020.5 million surpassed the consensus mark of $2,008 million by 0.7%. The top line increased 16% on a year-over-year basis. The upside can primarily attributed to robust comparable restaurant sales and new restaurant openings. In the quarter under review, Chipotle opened 51 new restaurants, taking the total restaurant count to 3,014.

Digital sales contributed 41.9% to sales during the quarter. During the first quarter, comparable restaurant sales increased 9% year over year, following growth of 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 and EPS Surprise
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 first-quarter 2022, food, beverage and packaging costs, as a percentage of revenues, increased 100 basis points (bps) year over year to 31%. The upside was primarily driven by a rise in beef, paper and avocado costs. However, this was partially offset by benefits from menu price increases.

During the reported quarter, restaurant-level operating margin came in at 20.7%, down from 22.3% in the year-ago quarter. The decline was primarily due to increases in hourly wages and higher food costs, which was marginally overshadowed by leverage from menu price increases and lower delivery costs.

Adjusted net income in the reported quarter amounted to $161.4 million compared with $153.1 million in the prior-year quarter.

Balance Sheet

Chipotle continues to impress investors with a solid financial position. As of Dec 31, the company reported cash and cash equivalent of $615.9 million, compared with $815.4 million.

Inventory totaled $29.9 million as of Mar 31, 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 first-quarter 2022.

During the first quarter, the company repurchased $260.1 million worth of stock at an average price of $1,490. Management approved an additional $300 million (exclusive of commissions) to repurchase shares. As of Mar 31, the company had approximately $280.8 million available for the buyback program.

2022 Outlook

For 2022, the company expects comps growth in the range of 10% to 12%.

The company expects to open 235 to 250 new restaurants in 2022. It expects 2022 tax rate in the range of 25-27%.

Zacks Rank & Key Picks

Chipotle carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are BBQ Holdings, Inc. BBQ, Dave & Buster's Entertainment, Inc. PLAY and Arcos Dorados Holdings Inc. ARCO.

BBQ Holdings sports a Zacks Rank #1 (Strong Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have gained 7.1% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and earnings per share (EPS) suggests growth of 40.9% and 66.2%, respectively, from the year-ago period’s levels.

Dave & Buster's flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have decreased 1% in the past year.

The Zacks Consensus Estimate for Dave & Buster's current-year sales and EPS suggests growth of 24.4% and 49.3%, respectively, from the year-ago period’s levels.

Arcos Dorados carries a Zacks Rank #1. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have surged 39% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 16.6% and 66.7%, respectively, from the year-ago period’s levels.


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