[ad_1]
Mexican Grill Chipotle (CMG) easily beat second quarter profit guidance after today’s close. Chipotle stocks jumped late.
X
The fast-paced, laid-back Mexican chain reports after announcing a pay rise for employees, causing menu prices to rise. The restaurant industry is recovering from coronavirus closures last year, but has struggled to attract workers.
Benefits of chipotle
Estimates: Wall Street expects Chipotle to earn $ 6.53 per share, according to FactSet, a jump of more than sixteen times. Revenue increased 38% to $ 1.88 billion.
Consensus Metrix expects a 30% gain in same-store sales as the company hits the lows of the pandemic era last spring.
Results: EPS soared 1,765% to $ 7.46, as revenue climbed 38.7% to $ 1.89 billion. Same store sales increased 31.2%. Chipotle attributed the gains to digital sales, a strong recovery in restaurant sales, positive reception to new menu items, and easy comparisons a year ago.
Digital sales grew 10.5% and accounted for 48.5% of sales. Just over half of digital sales came from advance order transactions.
The operating margin at the restaurant level more than doubled from 12.2% to 24.5% as the menu price rises, lower promotions and lower beef prices partially offset higher costs associated with new menu items, lawyer costs and monthly wage inflation.
Outlook: Management expects third-quarter same-store sales growth in a low to mid double-digit range.
Chipotle Stock
Shares were up 4.6% late in the day after closing 1.8% higher at 1,579.13 on the stock exchange today. Chipotle action now indicates a return above a buy point of 1579.62. The title broke through that entry earlier this month, but has now returned below.
The stocks have a strong composite rating of 98. The stock’s EPS rating is 91.
Domino’s Pizza (DPZ), which publishes its results Thursday, slipped 0.7%. Mcdonalds (MCD) rose 2.2% to 234.27. The hamburger chain shares are near a buy point of 238.28.
Chipotle’s inventory has grown significantly from last year as its digital ordering infrastructure has helped keep sales momentum going during the pandemic. However, analysts continue to wonder how many shares have more room for more gains.
Chipotle said in May it was looking to hire 20,000 employees across the United States. The increases, Chipotle said, would put staff starting hourly wages between $ 11 and $ 18 an hour.
The increase in wages resulted in a corresponding increase in menu item prices of around 4%.
IBD Live: a new tool for daily stock market analysis
‘Chipotlanes’ and delivery
William Blair analysts who cover Chipotle shares, in a research note on Monday, also noted that the chain had raised the prices of its delivery menu. Fees charged by delivery apps drove up his expenses. Chipotle also faces higher costs for beef and avocado.
The pandemic has helped popularize digital ordering and delivery, for example by Dash (DASH), Grubhub and Uber Eats. But the commission fees that online ordering platforms charge restaurants can be as high as 30%, raising concerns about whether small independent restaurants can absorb the costs.
Still, William Blair analysts expected solid sales gains for Chipotle for the remainder of the year.
“Given the healthy trends alongside the price increases, we now expect Chipotle to maintain double-digit lineups for the remainder of 2021,” they said.
However, they added that “we expect restaurant-level margins to decline sequentially from 22.5% to 23.5% in the second half of the year given the aforementioned hourly wage increases and the seasonality of the business. “.
Chipotle has invested in the deployment of its “Chipotlane” drive-thru lanes, which are geared towards digital controls. The company also said in March that it had invested in Nuro, a startup for autonomous delivery vehicles. Chipotle then said he planned to test the company’s cars eventually.
Domino’s announced it in April, and Nuro had launched a stand-alone delivery service in Houston.
YOU MAY ALSO LIKE:
IBD 50 stocks to watch out for: This medical marijuana action is not really medical marijuana action, it is IPF
How to Trade Stocks: Execute a Solid Trading Plan with a Letter Rating System
How Buffett and others scored $ 80 billion in five days of selling stocks
Is MGM Stock a buy as mask warrants return to some Vegas casinos?
After hours: 3 main drivers of income; Six new purchases after a large rally
[ad_2]
Source link