Chipotle Mexican Grill Inc.
) reported second-quarter adjusted earnings of $3.50 per share,
which beat the Zacks Consensus Estimate of $3.05 by 14.8% and were
up 24.1% year over year driven by an increase in the top line.
Revenues grew 28.6% year over year to $1.1 billion and beat the
Zacks Consensus Estimate of $980.0 million by 7.1%. The upside was
driven by higher comps growth and unit expansion.
Behind the Headline Numbers
Despite a recent price hike, comps grew 390 basis points (bps) from
the prior quarter and 1180 bps year over year to 17.3% in the
quarter, primarily driven by higher traffic and also due to an
increase in average check.
Total operating expenses were $870.2 million, up 29.8% year over
year due to higher food, beverage and packaging and other operating
Food costs as a percentage of revenues increased 150 bps to 34.6%
due to higher beef, avocado and cheese costs. However, labor costs
as a percentage of revenues, contracted 90 bps to 21.8%.
Restaurant level operating margin declined 30 bps year over year to
27.3% in the reported quarter due to higher food costs, partially
offset by favorable sales leverage.
Chipotle ended the quarter with cash and cash equivalents of $470.1
million, up from $411.6 million in the previous quarter. Total
shareholder equity was $1.75 billion, up from $1.65 billion in the
Comps Guidance Upped for 2014
Chipotle has increased its comps guidance for 2014. The company
expects comps in the mid-teens range versus the previous
expectation of high-single digits comps increase.
In 2014, Chipotle expects to open 180-195 restaurants.
Chipotle has been witnessing a fairly stable traffic trend over the
past few years driven by its strong market position, new menu
launches and increased media exposure. Further, the company's
decision to raise menu prices also did not affect its traffic. We
believe Chipotle will be able to keep its growth story intact as it
enjoys a loyal following from heath-conscious customers by serving
antibiotic-free meats and organic menu items.
Chipotle currently carries a Zacks Rank #2 (Buy). Other stocks in
the same industry that are worth considering include
Domino's Pizza, Inc.
Noodles & Company
Papa John's International Inc.
). All these stocks have the same Zacks Rank as Chipotle.
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CHIPOTLE MEXICN (CMG): Free Stock Analysis
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