Chipotle Mexican Grill Delivers Mixed Results In 1Q

Chipotle Mexican Grill reported mixed results on Wednesday as the company posted revenues of $1.7 billion, up by 23.4% year-on-year, but missed consensus estimates of $1.75 billion. The quick-service restaurant chain reported adjusted diluted earnings per share of $5.36, beating analysts’ estimates of $4.92 per share.

Chipotle Mexican Grill’s (CMG) Chairman and CEO, Brian Niccol said, “As vaccines roll out and we get closer to moving past this pandemic, I believe Chipotle is well positioned for growth. I’m excited about our future as we remain focused on innovating in culinary, leading in food with integrity, and providing convenient access inside our restaurants and through our expanding digital ecosystem.”

CMG’s growth in revenues was mainly driven by a jump of 133.9% year-on-year in digital sales to $869.8 million. Digital sales comprised 50.1% of the company’s total revenues in 1Q. The company said that the success of new product launches, government stimulus payments and strong marketing were key revenue growth drivers in 1Q.

The company did not provide any guidance regarding growth in comparable restaurant sales due to the uncertainty surrounding the economic recovery in the United States and its impact on CMG as a result of the COVID-19 pandemic. However, CMG did say that it hopes to open around 200 new restaurants in FY21, assuming less permit delays and minimal construction due to COVID-19. (See Chipotle Mexican Grill stock analysis on TipRanks)

On April 19, Stifel Nicolaus analyst Christopher O’Cull raised the price target from $1,550 to $1,750 and reiterated a Buy on the stock. The analyst believed that CMG’s comparable restaurant sales in 1Q would be at the high end of the management’s guidance because of successful product launches and stimulus payments from the US Government. As a result, Cull raised his FY21 and FY22 EPS estimates as he expects an increasing contribution from Chipotlane.

Overall, the consensus is that CMG is a Moderate Buy, based on 16 Buys and 8 Holds. The average analyst price target of $1,684.24 implies upside potential of about 11.7% to current levels.