Shares of Chipotle Mexican Grill (NYSE:CMG) shares are up more than 3% in premarket trading Wednesday after the restaurant chain reported results.
CMG reported Q1 adjusted EPS of $5.70, up from $5.36 in the year-ago quarter, and just above the consensus estimates of $5.67. Revenue came in at $2.0 billion in the period, up 15% YoY and in line with the estimated $2.01 billion.
The company reported comparable sales growth of +9%, compared to +17.2% in the same period last year, while analysts were expecting +7.86%. The company reported an operating margin of 9.4%, below the estimated 10.8%.
Chipotle reported 51 new locations in the period, up 28% YoY and above the consensus projection of 48. Average restaurant sales totaled $2.68 billion, slightly above the analyst consensus of $2.65 billion.
For the full year, CMG still expects the number of new restaurants to be in the range of 235 to 250, compared to the analyst expectations of 244. The new locations guidance includes 5-10 relocations to add a Chipotlane.
The chain expects Q2 comparable sales growth in the range of 10% to 12% if the current sales trends continue.
Cowen analyst Andrew Charles saw results as “pleasing” including “encouraging” sales comp guidance. The analyst also lowered the price target to $1,830.00 per share from $1,950.00.
“We believe 1Q's margin shortfall should be overshadowed by 2Q guidance for 25% margins, in excess of 24.6% Consensus Metrix. Better than expected 2Q guidance is driven by QTD sales strength, recent pricing actions, and a stabilization in commodity inflation over the last month, an encouraging development following sharp increases in recent months. Mgmt noted commodities will unlikely revert lower until 2023 at the earliest,” Charles wrote in a note.
Citi analyst Jon Tower raised the price target to $1,926.00 from $1,900.00 to reflect solid traffic growth.
“Bears may pick at the 2Q SSS guide; however, we believe it should be sufficient in a market braced for a shoe to drop on the consumer, and a continued re-opening trade, stabilizing employment from field leadership down, and a renewed focus on throughput all point to room for SSS to accelerate beyond just the mechanics of pre- vs post-Easter… Shares trail the market by ~500bps YTD, and we think today’s update will stem the tide and go a long way in reassuring investors that consumers will pay more for the food they value,” Tower said in a note.
By Senad Karaahmetovic