Market News

Chipotle Predicts Strong Q2 Growth; Shares Up 3.4%

Chipotle Mexican Grill (NYSE: CMG) reported mixed Q1 results. The U.S.-based global chain of fast-casual restaurants specializing in tacos and Mission burritos exceeded earnings estimates, but slightly fell short of revenue expectations.

Investors cheered the encouraging outlook for comparable restaurant sales growth provided by the company for the upcoming second quarter.

Likewise, CMG shares gained 3.4% during the extended trading session on April 26.

Q1 Performance

The company reported quarterly earnings of $5.70 per share, six cents better than analysts’ estimates of $5.64 per share and 6.3% higher than the earnings of $5.36 per share reported for the prior-year period.

Similarly, revenue climbed an impressive 16% to $2 billion compared to the prior-year period, but fell modestly short of the Street’s estimate of $2.01 billion.

The revenue growth is attributed to comparable restaurant sales growth of 9% seen during the quarter as well as new restaurant openings. The company opened 51 new restaurants across 42 locations, including a Chipotlane.

FY2022 Outlook

Based on robust Q1 results, management updated financial guidance for FY2021.

For the second quarter, based on the assumption that current sales trends continue, the company now forecasts comparable restaurant sales growth in the range of 10% to 12%.

Furthermore, the company projects new restaurant openings in the 235 to 250 range, which includes five to ten relocations that plan to add a Chipotlane.

CEO Comments

Chipotle CEO, Brian Niccol, commented, “Our investments in our people, coupled with our digital system and commitment to culinary driven by Food With Integrity resulted in serving more guests at our restaurants with excellence.”

Wall Street’s Take

Following the results, Stifel Nicolaus analyst Chris O`Cull reiterated a Buy rating on the stock with a price target of $1,850 (28.63% upside potential).

Overall, the stock has a Strong Buy consensus rating based on 14 Buys and three Holds. The average Chipotle price target of $1,956.12 implies 36.01% upside potential from current levels.

TipRanks’ Smart Score

CMG scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

Website Traffic

According to TipRanks’ Website Traffic Tool, the CMG website has recorded year-to-date website growth of 112.88% so far this year, reaffirming its strong results.

Furthermore, CMG saw a 31.86% sequential increase to 24.3 million unique visitors to its website in March.

Conclusion

The company, like many of its rivals, is combating the rising costs triggered by growing inflation by price increases. Positively, the price increase has not affected demand for its products, and the growth outlook remains strong, which bode well for the stock in the coming months.

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