{"id":6131,"date":"2023-10-27T21:10:26","date_gmt":"2023-10-27T21:10:26","guid":{"rendered":"https:\/\/infundpros.com\/investment\/chipotles-q3-results-could-make-it-a-standout-in-restaurant-earnings-season\/"},"modified":"2023-10-27T21:10:27","modified_gmt":"2023-10-27T21:10:27","slug":"chipotles-q3-results-could-make-it-a-standout-in-restaurant-earnings-season","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=6131","title":{"rendered":"Chipotle\u2019s Q3 results could make it a standout in restaurant earnings season"},"content":{"rendered":"
\n

Chipotle Mexican Grill Inc. kicked off restaurant earnings season after market close Thursday, reporting transaction growth through its third quarter, despite swirling concerns about consumer spending.\u00a0<\/p>\n

\u201cWe believe CMG will stand out from the crowd when restaurant earnings season is finalized with a 3Q23 beat on SSS, margins and EPS,\u201d Oppenheimer analyst Brian Bittner wrote in a note released Friday.<\/p>\n

\n

Chipotle\u2019s
\n CMG,
\n +4.49%<\/bg-quote>
\n third-quarter operating margin was 16%, up from 15.1% in the prior year\u2019s quarter. The company\u2019s restaurant-level operating margin was 26.3%, compared with 25.3% in the same period last year.<\/p>\n

Related: <\/strong>Chipotle shares climb on Q3 earnings beat, strong comparable sales<\/p>\n

Set against this backdrop, Oppenheimer reiterated its outperform rating for Chipotle. \u201cTraffic trends are solidly positive with built-in operational accelerators still unfolding over the next several quarters,\u201d he added. \u201cLonger-term, CMG possesses a compelling opportunity to further enhance throughput and build traffic as automated tools (e.g. Hyphen) are implemented across the system.\u201d<\/p>\n

Speaking during a conference call to discuss the results Thursday, Chipotle CEO Brian Niccol said that the company\u2019s transaction throughput showed improvement every month during the third quarter.<\/p>\n

Chipotle shares rose 3.5% in premarket trades Friday, while McDonald\u2019s Corp.
\n MCD,
\n -0.03%<\/bg-quote>
\n stock rose 0.5% and Wendy\u2019s Co.
\n WEN,
\n -0.47%<\/bg-quote>
\n rose 1.7%. Earlier this month, McDonald\u2019s stock suffered its longest weekly losing streak\u00a0in four years amid consumer-spending worries.\u00a0McDonald\u2019s reports third-quarter results on Oct. 30.\u00a0Wendy\u2019s reports third-quarter results on Nov. 2.<\/p>\n

Related:<\/strong>\u00a0McDonald\u2019s and Chipotle set to continue dominance amid consumer-spending worries, research shows<\/p>\n

Raymond James reiterated its outperform rating for Chipotle in a note released Friday. \u201cCombined with accelerating unit growth in 2024 (+8.5-9.0%) on its way towards 10% into 2025E, we continue to view\u00a0CMG\u00a0as one of the more compelling secular growth stories within the restaurant (and broader consumer) sector,\u201d wrote Raymond James analyst Brian Vaccaro.<\/p>\n

Stifel maintained its buy rating for Chipotle in a note released Thursday, with analyst Chris O\u2019Cull highlighting the company\u2019s third-quarter transactions. \u201cTransactions increased more than 4%, exceeding expectations and accelerating during the quarter, with the momentum continuing into October,\u201d he wrote. \u201cWe believe Chipotle\u2019s transaction results will stand out among restaurants reporting 3Q results over the next few weeks.\u201d<\/p>\n

\u201cBased on mobile location data and recent conversations with operators, we believe industry sales slowed through 3Q and into October,\u201d he added. \u201cChipotle\u2019s strong value proposition and improving throughput should position it well to continue outperforming.\u201d<\/p>\n

Related:<\/strong>McDonald\u2019s Halloween \u2018Boo Buckets\u2019 are back \u2014 facing off against Burger King\u2019s \u2018Trick or Heat\u2019 plastic pails<\/p>\n

Truist Securities also highlighted Chipotle\u2019s \u201cimpressive\u201d traffic growth in a note Thursday. \u201cTraffic is being driven by the 9\/13 launch of Carne Asada (sales are surpassing internal expectations), improving throughput (a top focus of management), easy year ago comparisons (troughed in 4Q22 after significant menu price increases) and an attractive value proposition (traffic is consistent across income cohorts),\u201d wrote Truist Securities\u2019 Jake Bartlett. Truist Securities maintained its buy rating for Chipotle.<\/p>\n

Wells Fargo analyst Zachary Fadem said he expects Wells Fargo to trade higher Friday, boosted by the third quarter results. In a note released Thursday, Fadem cited Chipotle\u2019s improving transactions, its margins, which \u201cbeat handily,\u201d and its fourth quarter comparable restaurant sales guide, which \u201cmet the high water mark.\u201d<\/p>\n

\u201cAll in, we like the setup into FY24, w\/ a unit growth step up, throughput drivers & price\/RLM [restaurant level margin] levers,\u201d Fadem added. Wells Fargo has an overweight rating for Chipotle.<\/p>\n

Of 35 analysts surveyed by FactSet, 25 had an overweight or buy rating and 10 had a hold rating for Chipotle. Shares of Chipotle have risen 30.2% in 2023, outpacing the S&P 500 index\u2019s gain of 7.8%.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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