Chipotle shares up 10% after announcing its financials for the second quarter

By:
on Jul 30, 2022
  • Recorded a $9.30 adjusted EPS in the second quarter, topping the $9.09 consensus estimates.
  • Reported $2.21 billion in total revenue in the same quarter, representing a 17% year-over-year increase.
  • The company opened a total of 42 new locations by the end of the second quarter.

Chipotle Mexican Grill (NYSE: CMGstock went up 10% after announcing its second quarter financials for the year 2022. The fast-food chain known for its Mexican-inspired cuisine beat most analyst estimates by quite a considerable margin.

Chipotle tops analyst estimates 

Chipotle Mexican Grill recorded a $9.30 adjusted EPS in the second quarter, more than the $7.46 it reported in the same quarter of the previous fiscal year and topped the $9.09 consensus estimates. The company recorded $2.21 billion in total revenue in the same quarter, representing a 17% year-over-year increase. However, this was lower than the $2.25 billion consensus projection.

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The fast-food conglomerate had a 10% increase in same-store sales, which was less than the 11% increase analysts estimated. The 15% operating margin was also less than the 15.7% analyst estimates, but more than the 13% it recorded in the same quarter of the previous financial year.

The company opened a total of 42 new locations by the end of the second quarter, representing a 25% year-over-year decrease and was also below the 53 consensus estimates. However, the fast-food chain expects to open around 235 to 250 new locations on a full-year financial basis, which is slightly more than the 248 analyst forecast.

Chipotle Chief Executive Officer and Chairman, Brian Niccol said:

We are pleased with our second quarter performance during a period of inflation and consumer uncertainty. Our pricing power and value proposition remain strong as our culinary and food with integrity commitment continues to be a key point of differentiation.

Analyst comments and estimates 

Eric Gonzales, a Keybanc financial analyst slashed the price target from $1,900 to $1,750 but still remains positive when it comes to the CMG story.

In a note, Gonzalez told clients:

Our estimates remain comfortably ahead of consensus based on our belief in the brand’s value proposition and the sense that the Company will continue to deploy pricing when necessary to protect profitability and achieve its long-term margin goals.

However, John Glass, a Morgan Stanley financial analyst, hiked the price target from $1,769 to $1,808 to reflect better financial margins. He claimed that further corresponding margin and incremental pricing actions will cause numbers to rise.

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