Chipotle (CMG) on Wednesday released a first-quarter revenue report that exceeded market expectations, with fast-food giant’s digital sales doubling as pandemic-powered app purchases outpaced personal purchases.
Here’s what the California company reported, compared to Wall Street expectations, according to a consensual Bloomberg estimate:
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Income: $ 1.74 billion compared to the expected $ 1.75 billion
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Adj. earnings per share (EPS): $ 5.36 versus $ 4.91 per share expected
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In-store sales: 17.2% compared to 17.18% expected
Compared to a year ago, digital sales rose to $ 869.8 million and were primarily driven by pre-order transactions by guests and the addition of “Chipotlane” drive-through. of sales.
“As vaccines are launched and we are approaching the pandemic, I think Chipotle is well positioned for growth,” said Brian Niccol, Chipotle’s president and CEO.
“I am delighted with our future because we remain focused on innovating in the culinary field, leading in integrity food and providing convenient access to our restaurants and our expanding digital ecosystem,” he added.
Chipotle shares, which closed more than 1% lower in Wednesday’s session at 1,507.62, rose modestly in trading after the program.
In the last quarter, the company introduced Quesadilla Hand-Crafted, but diners can only order it online. The move is part of a customer loyalty effort with a combination of cheap food and app-based offerings.
The first quarter hosted a series of initiatives designed specifically to justify Generation Z consumers. In March, the company announced a collaboration with elf Beauty (ELF) to serve a makeup collection called “elf x Chipotle,” which includes a set of makeup with names designed to refer to the Chipotle menu.
Chipotle then followed an effort to travel on the Bitcoin Bonanza with plans to offer $ 100,000 in free burritos and $ 100,000 in Bitcoin (BTC-USD), coinciding with another April 1 holiday: National Burrito Day.
The “middle stages” of a change
This report comes as Wall Street was eager to find out if a combination of new menu items and digital bargains aimed at younger consumers could support the momentum that propelled the company through the COVID-19 crisis.
And indeed, these factors worked to Chipotle’s benefit. During the quarter, the company opened 40 new restaurants, 26 of which include “Chipotlanes”, while five locations closed – bringing the total number of restaurants to 2,803.
In a note earlier this month, JP Morgan’s John Ivankoe remains neutral on Chipotle, with a target price of $ 1,460.00. He expects the company to record double-digit sales margins of $ 20 billion in sales, but does not see much momentum for a big move.
“Chipotle still has the opportunity to grow companies throughout the year 2021, due to the reopening of dining rooms and prices,” the analyst said. “The company seems to be teasing some higher revenue targets in the United States.”
However, BTIG’s Peter Saleh is more optimistic about equities, reiterating it as a “Buy” last month, with a target price of $ 1,600, largely relative to the potential quesadilla.
“We believe that the launch of Quesadilla will translate into a continuous boost in sales in the same store and will support a healthy digital sales mix. We expect this product to attract new customers to the brand, as it has been the most requested menu item with over 20 million unfilled orders per year, “eventually expanding the customer base,” the analyst wrote.
Saleh added that he sees the food chain in the “middle stages” of its economic change, as it appears to be returning from the coronavirus pandemic.
Nicholas Johnson of Morningstar is also optimistic about the long-term potential of the casual fast chain. In a note from early February, following Chipotle’s earnings in the fourth quarter, he notes, “In our view, it is clear that [Niccol] restored the Chipotle Foundation and positioned the company for superior industry growth in the following years. ”
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at [email protected].
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