Chipotle Stock Gains After Chain Beats Earnings Expectations
Chipotle Mexican Grill is rising in after-hours trading on Tuesday after the burrito chain reported third-quarter earnings that came in ahead of consensus expectations.
The back story. Chipotle stock (ticker: CMG) is up more than 90% in 2019, easily leaving the rest of the rallying fast-food sector, as well as the broader market, far behind.
The shares have benefited from strong earnings and popular new menu additions, as well as an increase in digital and delivery orders. Analysts have been quick to praise Chipotle and predict more gains to come, with few bears willing to stand up to the stock's momentum.
What's new. After the close Tuesday, Chipotle said it earned $3.82 a share on revenue of $1.4 billion, while analysts were looking for EPS of $3.22 on revenue of $1.38 billion.
Chipotle said that same-store sales rose 11% in the quarter, ahead of the 9.3% consensus estimate, and included a 7.5% increase in comparable-store transaction growth. Restaurant operating margins expanded 2.1 percentage points, to 20.8%.
Looking ahead. For the full year, Chipotle said it expects to deliver same-store sales growth near the top of its high-single-digit guidance, and roughly meet its prior forecast for 140 to 155 new location openings. For 2020, management said it plans to open between 150 and 165 new restaurants.
Chipotle closed down 2.4% in regular trading but is up about 1% to $840 at a recent check. The quarter was a good one, with a sizable bottom-line beat, and the company said that digital sales grew nearly 88%, accounting for more than 18% of sales. That's good news for a company that has invested heavily in technology, and it has said it's seeing those projects bear fruit.
The increase in average transaction per quarter also shows the power of new products, in this case carne asada, to get consumers to boost their spending during regular visits as well. Bulls will say this bodes well for future menu innovation (including possibly a quesadilla) as a catalyst to encourage loyalty and bigger checks.
Write to Teresa Rivas at [email protected]
Stock Markets 24 minutes ago (Oct 16, 2019 07:26AM ET) (Reuters) - Bank of America Corp (N:), the second-largest U.S. bank by assets, beat analysts' estimates for quarterly profit as gains from trading
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