Are Chipotle Earnings Enough to Move The Needle?

When Chipotle Mexican Grill Inc. (NYSE: CMG) released fourth-quarter financial results after markets closed Tuesday, the company posted $2.86 in adjusted earnings per share (EPS) on $1.4 billion in revenue. That compared with consensus estimates of $2.75 in EPS and revenue of $1.4 billion and with earnings of $1.72 per share and $1.23 billion in revenue posted in the same period last year.

During the most recent quarter, comparable restaurant sales increased by 13.4%. Comparable restaurant sales improved due to an 8.0% increase in comparable restaurant transactions as well as a 5.4% increase in the average check.

At the same time, digital sales grew 78.3% in the quarter and accounted for 19.6% of sales.

Restaurant-level operating margin was 19.2%, an increase from 17.0% in the fourth quarter of 2018. The improvement was driven primarily by leverage from the comparable restaurant sales increase, partially offset by wage inflation at the crew level and increased delivery expenses.

Food, beverage, and packaging costs were 33.1% of revenue, a decrease of 10 basis points compared to the fourth quarter of 2018.

Looking ahead to the 2020 full year, the company expects mid-single-digit comparable restaurant sales growth and 150 to 165 new restaurant openings. Consensus estimates call for $18.11 in EPS and $6.25 billion in revenue for the year.

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CEO Brian Niccol commented:

We had a strong ending to 2019 as Q4 marks the eighth-consecutive quarter of accelerating comparable sales, which highlights that running great restaurants with the right leaders and the right culture is delivering outstanding financial performance. For the full year, Chipotle’s average unit volumes exceeded $2.2 million and digital sales surpassed a billion dollars, showing that our key strategies are working, and the Chipotle brand is thriving as we build a sustainable model that helps cultivate a better world.

Shares of Chipotle closed Tuesday at $884.82, with a 52-week range of $519.09 to $890.09. The stock has a consensus analyst price target of $899.00. Following the announcement, the stock was up less than 1% at $890.00 in the after-hours session.

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