Chipotle Mexican Grill, Inc. CMG released fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis. Earnings surpassed the consensus estimate for the fourth consecutive quarter.
Following the earnings release, shares of the company rose 2.9% during the after-hours trading session on Feb 6.
Q4 Earnings & Revenue Discussion
In the quarter under review, Chipotle reported adjusted earnings per share (EPS) of $10.36, outpacing the Zacks Consensus Estimate of $9.73. The bottom line improved 25% from $8.29 in the year-ago quarter.
Quarterly revenues of $2,516.3 million surpassed the consensus mark of $2,492 million. The top line jumped 15.4% on a year-over-year basis on the back of strong comparable restaurant sales growth and new restaurant openings. In the reported quarter, Chipotle opened 121 new restaurants with 110 locations including a Chipotlane.
Digital sales contributed 36.1% to total food and beverage revenues.
Comparable restaurant sales grew 7.9% year over year compared with 5% in the previous quarter. Our estimate was pegged at 6.3%.
Costs, Operating Highlights & Net Income
During fourth-quarter 2023, food, beverage and packaging costs, as a percentage of revenues, came in at 29.7%, up 40 basis points year over year. Increased cost across the board, most notably beef produce as well as queso, was marginally overshadowed by menu price increases and lower paper costs. We suggested the metric to be 30%.
During the quarter under discussion, the restaurant-level operating margin reached 25.4%, up from 24% a year ago. The uptick was primarily driven by sales leverage. We predicted the metric to be 23.9%.
Adjusted net income in the reported quarter amounted to $286.2 million, up 23.7% year over year.
Balance Sheet
As of Dec 31, 2023, the company reported cash and cash equivalents of $560.3 million compared with $384 million as of Dec 31, 2022.
As of Dec 31, 2023, inventory totaled $39.3 million compared with $35.7 million as of Dec 31, 2022. Goodwill (as a percentage of total assets) reached 0.3% at the end of the fourth quarter of 2023.
During the fourth quarter, CMG repurchased $144.3 million worth of stock at an average price of $1,938.8.
Outlook
For 2024, management expects comps growth in the mid-single-digit range.
CMG anticipates to open 285-315 new restaurants in 2024. It suggests 2024 tax rate in the range of 25-27%.
Zacks Rank
Chipotle currently carries a Zacks Rank #3 (Hold).
Key Picks
Below, we present some better-ranked stocks in the Zacks Retail-Restaurants industry.
Carrols Restaurant Group, Inc. TAST sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 102%, on average. Shares of TAST have rallied 363.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TAST’s 2024 sales and EPS indicates 3.8% and 25.5% growth, respectively, from the year-ago levels.
Darden Restaurants, Inc. DRI carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 4.2%, on average. Shares of DRI have increased 11.2% in the past year.
The Zacks Consensus Estimate for DRI’s 2024 sales and EPS indicates 9.9% and 10.9% growth, respectively, from the year-earlier levels.
Dave & Buster's Entertainment, Inc. PLAY carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 34.5%, on average. The stock has gained 45.9% in the past year.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS suggests a rise of 12.8% and 14.3%, respectively, from the prior-year levels.
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