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Chipotle Beats on 35% Earnings Rise, Stock Slides

Higher prices, more restaurants drive revenue, earnings increase


High-flying Chipotle Mexican Grill (NYSE:CMG) continues to produce strong financial results and exceed analysts’ predictions, but investors appeared to chill their ardor a bit after poring over the latest report.

CMG announced that first quarter earnings shot up 35.1% to $62.7 million, while revenues jumped 25.8% to $640.6 million, compared to the same period last year. Diluted earnings per share for the quarter rose 34.9% to $1.97, compared to $1.46 a share in 2011.

The Associated Press said analysts had expected revenues of $630.9 million and diluted EPS of $1.93 for the quarter.

Restaurant-level operating margin rose 220 basis points to 27.4%.

Chipotle attributed revenue growth to the opening of 32 new restaurants during the quarter and increased menu prices, which drove a 12.7% increase in comparable restaurant sales. CMG said it expected to open between 155 and 165 new restaurant during 2012.

It forecast “mid-single digit comparable restaurant sales growth” and anticipated food price inflation of “mid-single digits” during the rest of the year.

The company’s shares were off nearly 2% in early Friday trading, slipping to around $423. Why the muted reaction? Could be that mid-single digit growth forecast — and similar inflation expectation. That growth is a lot less than the 12.7% CMG put up in its latest quarter, and questions about whether Chipotle can keep up its torrid pace are starting to get louder.

Article printed from InvestorPlace Media,

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