Stock Story -
Mexican fast-food chain Chipotle (NYSE:CMG) reported Q1 CY2024 results topping analysts' expectations, with revenue down 14.1% year on year to $2.70 billion. It made a non-GAAP profit of $13.37 per share, improving from its profit of $10.50 per share in the same quarter last year.
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Chipotle (CMG) Q1 CY2024 Highlights:
- Revenue: $2.70 billion vs analyst estimates of $2.67 billion (1.2% beat)
- EPS (non-GAAP): $13.37 vs analyst estimates of $11.68 (14.5% beat)
- Gross Margin (GAAP): 41.7%, up from 41% in the same quarter last year
- Free Cash Flow of $436.5 million, up from $93.53 million in the previous quarter
- Same-Store Sales were up 7% year on year
- Full year guidance for "comparable restaurant sales growth in the mid to high-single digit range" (raised from previous guide of mid-single digit, analyst estimates are for up 5.9% year on year)
- Store Locations: 3,479 at quarter end, increasing by 255 over the last 12 months
- Market Capitalization: $80.07 billion
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Modern Fast FoodModern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.
Sales GrowthChipotle is one of the most widely recognized restaurant chains in the world and benefits from brand equity, giving it customer loyalty and more influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 15.2% over the last five years was impressive as it added more dining locations and increased sales at existing, established restaurants.
This quarter, Chipotle reported robust year-on-year revenue growth of 14.1%, and its $2.70 billion in revenue exceeded Wall Street's estimates by 1.2%. Looking ahead, Wall Street expects sales to grow 13.6% over the next 12 months, a deceleration from this quarter.
Same-Store SalesSame-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.
Chipotle's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 7.8% year on year. With positive same-store sales growth amid an increasing number of restaurants, Chipotle is reaching more diners and growing sales.
In the latest quarter, Chipotle's same-store sales rose 7% year on year. This growth was a deceleration from the 10.9% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.
Key Takeaways from Chipotle's Q1 Results We liked that Chipotle beat same store sales, revenue, gross margin, and EPS expectations. Full year guidance for comparable store sales was raised from mid-single digit year on year percentage increase to mid to high-single digit percentage increase. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock is up 4.1% after reporting and currently trades at $3,045 per share.