Chipotle (CMG) Stock Rockets After Reporting Second Quarter Earnings

Shares of Chipotle Mexican Grill Inc. (CMG) were up +56.98, or +9.62 percent to $649.40 per share in afterhours trading on Monday afternoon, after the company reported a +28.7 percent increase in revenue, beating analyst estimates by 6 percent. Chipotle stock closed at $589.93 per share, down -2.49 or -0.42 percent in Monday's regular trading session.

Denver, Colorado based Chipotle Mexican Grill Inc. is a restaurant chain founded by Steve Ells in 1993, with 16 locations in Colorado.
McDonald's Corporation (MCD) then invested heavily in the company in 1998. McDonald's divested its shares in the company in 2006 after the company had grown to 500 locations. With the opening of 45 new restaurants in the second quarter of 2014, the restaurant chain now has 1,681 locations in the United States, Canada, France and Germany and employs more than 37,000 people worldwide.

Chipotle reported diluted earnings of $3.50 per share in the second quarter, an increase of +24.1 percent over the same period last year, and +14 percent above the analyst consensus of $3.07 per share. The increase in sales to $1.05 billion compares to $982.2 million last year and notably higher than analyst estimates of $990 million.

Other highlights reported by the company included comparable restaurant sales, increasing +17.3 percent over 2013's second quarter and restaurant level operating margin, coming in at 27.3 percent, a 30 basis point decrease. Net income was $110.3 million, +25.5 percent over the same period one year ago.

For the six months ended June 30th, 2014, Chipotle saw revenue increase +26.6 percent to $1.95 billion, while comparable restaurant sales rose +15.5 percent. Diluted earnings for the first half of the year came to $6.14, +16.5 higher than the first half of 2013, with the company opening a total of 89 new restaurants.

Founder Steve Ells, Chairman and co-CEO of Chipotle said after the earnings release, "We're pleased that we continued to drive excellent results in the second quarter, including one of our strongest sales comps as a public company. These extraordinary results are made possible by our special food culture, innovative people culture, and strong business model that are not only creating significant shareholder value, but also helping us realize our vision to change the way people think about and eat fast food .

In a conference call late yesterday, Ells told analysts that, "Our ability to generate such strong sales growth is the direct result of our restaurant managers and crews providing an exceptional dining experience, which keep the customers coming back and allows us to build such a strong customer loyalty.

Chipotle's outlook for 2014 has the company expecting to open 180 to 195 new restaurants by year's end, with comparable restaurant sales to continue in the mid-teens, and an effective full year tax rate of 39.1 percent.

Chipotle stock will most likely open at a new all-time high this morning. With continued stellar results the stock may spend some time in uncharted territory. So far, Chipotle Mexican Grill is one of the hottest food stocks in recent memory.

Other News About Chiptole Mexican Grill
People Still Flocking To Chipotle Despite Higher Burrito Prices
Chipotle continues to expand their customer base even with higher prices.
Look out, 'Burrito Inflation' is here
Higher avocado and beef prices force Chipotle to raise prices further.

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Published on Jul 22, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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