Chipotle Mexican Grill Inc.
) has reported fourth-quarter 2012 earnings of $1.95 per share,
which were in line with the Zacks Consensus Estimate. The results
were ahead of the year-ago earnings of $1.81 per share. Revenue
as well as comparable restaurant sales (comps) improvement led to
the year-over-year growth in earnings.
In full year 2012, the company's earnings were $8.75 per
share, missing the Zacks Consensus Estimate by 4 cents but
improving from the year-earlier earnings of $6.76.
The fast food restaurant chain reported fourth quarter
revenues of $699.2 million, up 17.2% year over year, buoyed by
new restaurant openings and higher comparable store sales
(comps). Revenues surpassed the Zacks Consensus Estimate of $693
million. In 2011, revenue increased 20.3% to $2.73 billion year
Behind the Headline Numbers
Comps registered a 3.8% and 7.1% growth in the fourth-quarter
and full-year 2012, respectively, backed by higher traffic.
Higher menu prices added about 2.8% during the year. Comps were
also benefited by the favorable weather in December. However,
comps fell 100 basis points (bps) sequentially and 730 bps
annually. In the fourth quarter, comp transaction grew 3.8%.
The restaurant operating margin declined 150 bps annually to
24.6%, owing to the rise in food expenditure by 130 bps to 33.5%
and 10-bps increase in labor cost whereas occupancy costs and
other operating costs remained consistent year over year.
Total operating margin plunged 110 bps to 14.6% in the
quarter, attributable to high labor and food costs. However,
general and administrative expenses declined 20 bps year over
year to 6.2% as a result of sales growth.
During 2012, Chipotle opened 183 new restaurants with 60 units
in fourth quarter. As of December 31, 2012, the company operated
Chipotle ended the quarter with cash and cash equivalents of
$322.6 million and shareholders' equity of $1,246 million.
For 2013, management expects comps to be consistent with
low-single digit level (rise in menu price excluded). Effective
tax rate will be nearly 38.5%. Further, the company remains on
track to open nearly 165-180 new restaurants in 2013. Food
inflation will be within 33.5% and 34% in 2013.
Chipotle seems to gain its momentum on the back of its
revenues as well comps growth. However, higher input costs,
difficult consumer-spending environment and low comps projection
for 2013 are areas of serious concern.
Though this array of concerns came as a disappointment to some
investors, we believe that Chipotle is still well positioned to
generate improved earnings going forward.
Chipotle currently carries a Zacks Rank #3 (Hold). Among its
Yum! Brands Inc.
) reported fourth quarter 2012 adjusted earnings of 83 cents per
share, ahead of the Zacks Consensus Estimate by 2 cents. Earnings
surged 10% year over year. In full year 2012, Yum! Brands'
adjusted earnings were $3.25 per share, up 13% year over
AFC Enterprises Inc.
) recently declared its preliminary fourth quarter and full year
2012 results. The company projects its adjusted earnings per
share for the full year of 2012 to be within $1.23-$1.24, up from
99 cents in 2011. AFC also provided a rosy outlook for 2013. AFC
currently holds a Zacks Rank #2 (Buy).
Yet another peer
Dunkin Brands Group, Inc.
) recently posted fourth-quarter and full year 2012. It currently
holds a Zacks Rank #2 (Buy).
AFC ENTERPRISES (AFCE): Free Stock Analysis
CHIPOTLE MEXICN (CMG): Free Stock Analysis
DUNKIN BRANDS (DNKN): Free Stock Analysis
YUM! BRANDS INC (YUM): Free Stock Analysis
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