Chipotle Mexican Grill, Inc. (NYSE: CMG)
Earnings Report
After the close on Tuesday, Chipotle Mexican Grill (CMG) released earnings that missed Wall Street expectations and sent shares plummeting over 50 points in the post market session. CMG posted third quarter earnings of $4.59 per share on $1.2 billion in revenues, which beat the same period last year of $4.15 EPS on $1.08 billion while analyst were expecting earnings of $4.63 per share on $1.22 billion in revenues. CMG has a total of 1,931 restaurants with 53 new ones opening this quarter and they increased their guidance on the amount of stores opened for the year to 215-225 up from the previous estimate of 190-205. Chairman and Co-CEO Steven Ells had this to say during their conference call following their earnings release:
“I’m pleased with our performance during the third quarter and throughout the full year. With very difficult comparisons against the record year we had in 2014, we have continued to grow our business in a competitive environment while maintaining some of the best margins in the industry. During the quarter, we generated revenue of $1.2 billion, an increase of 12%, on comparable restaurant sales growth of 2.6% and the opening of 53 new restaurants. This produced diluted earnings of $4.59 per share, an increase of 11%. With year-to-date revenue of $3.5 billion, comp sales growth of 5.5%, and earnings per share growth of 26%, we are well on track to deliver another strong year. More than that, I’m proud of the fact that we continue to deliver such strong results by maintaining true to our vision to change the way people think about and eat fast food.” TheStreet
Following the earnings release price targets were cut at Jefferies from $700 to $680 and at Barclays from $685 to $660. I think the share price being down as big as it is, is a bit of an overreaction. The company is healthy and growing but headwinds are slowing it down from expectations. They still have great margins and a great business model that they’ve been executing well on and it doesn’t hurt that more stores are going up than expected. I like the upside on this company and will definitely be keeping an eye on them.
CMG Technicals
CMG started the year off great until they released their first earnings report that sent shares tanking and into a new downtrend where it bottomed out for the year at $597.33. Since they put in that bottom back at the beginning of May shares have taken off again to highs of $758.49 and have since stayed between the $700 and $750 range. Share prices are well above the 200 day moving average that is currently sitting at $678.94 where you can expect to find some support as well as the $705 level. Resistance will be met at $740 and $760 so keep an eye on those levels as well.
After CMG released their earnings, share prices were absolutely crushed, dropping roughly 50 points in the post market. Shares closed the day at $705.63 and opened Wednesday down at $650.60, a 7.8% drop. Shares consolidated for most of the day between support at $650 and the high end of the range at $663 before closing the day at $665.67. This was a big move against CMG as shares are now well below the 200 day moving average and the Relative Strength Index got pushed all the way down to 28, signaling a oversold conditions. As long as prices are below the 200 day moving average you have to be weary of getting long.
About Chipotle Mexican Grill, Inc.
Chipotle Mexican Grill, Inc. develops and operates fast-casual, fresh Mexican food restaurants throughout the U.S., which serve a focused menu of burritos, tacos, burrito bowls and salads. The company also has restaurants in Canada, England, France and Germany. The company was founded by Steve Ells in 1993 and is headquartered in Denver, CO. MarketWatch
