Chipotle Mexican Grill (NYSE:CMG) delivered better-than-expected Q1 financial results despite inflationary headwinds. Thanks to the ongoing momentum in its business, the quick-service restaurant chain operator raised its full-year comparable restaurant sales outlook. As a result, CMG stock gained 3.05% in Wednesday’s after-hours trading.
It’s worth noting that CMG stock has gained about 27.5% year-to-date, outperforming its peers, including Wendy’s (NASDAQ:WEN), McDonald’s (NYSE:MCD), and Starbucks (NASDAQ:SBUX). Wendy’s stock is up about 1.2% year-to-date. At the same time, MCD and SBUX stocks fell 7.1% and 8.2%, respectively.
Chipotle’s sticky customer base and improving throughput in its restaurants have driven its comparable sales and share price.
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With this background, let’s delve into CMG’s Q1 performance.
CMG’s Sales and EPS Exceed Expectations
CMG delivered total revenue of $2.7 billion in the first quarter, up 14.1% year-over-year. The 7% increase in comparable sales and new restaurant openings drove its top line in Q1. The increase in comparable sales was driven by a 5.4% improvement in transactions and a 1.6% growth in average checks. Further, CMG’s total revenue exceeded analysts’ average estimate of $2.68 billion.
Chipotle delivered adjusted EPS of $13.37, up over 27% year over year, driven by higher sales and improved restaurant-level margins. Moreover, its EPS surpassed analysts’ average estimate of $11.69.
Outlook
Chipotle’s management highlighted that the momentum in its business has continued into April. As a result, the company increased its full-year comparable sales outlook.
CMG now projects its comparable sales to increase by a mid- to high-single-digit rate. Earlier, the company expected its comparable sales to grow at a mid-single-digit rate.
Is Chipotle a Buy, Sell, or Hold?
Given the ongoing macro headwinds, analysts are cautiously optimistic about CMG’s prospects.
Chipotle stock has 19 Buy and nine Hold recommendations for a Moderate Buy consensus rating. The average price target on CMG stock is $3,036.37, implying a limited upside potential of 3.75% from current levels. Chipotle stock is up over 64% in one year.
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