Chipotle Mexican Grill, Inc. Stock Slides After Earnings

Chipotle Mexican Grill, Inc. Stock Slides After Earnings
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Shares of Chipotle Mexican Grill slumped by as much as 5.87% in after-hours trading, falling as low as $682.66 per share after the earnings report

Chipotle Mexican Grill released its latest earnings report after closing bell tonight, posting diluted earnings of $3.84 per share on $1.07 billion in revenue, a 26.7% year over year increase. Analysts had been expecting earnings of $3.79 per share on $1.08 billion in revenue for the fourth quarter. In the same quarter last year, the fast casual chain reported earnings of $2.53 per share.

Key metrics from Chipotle Mexican Grill’s earnings report

Chipotle’s comparable restaurant sales climbed 16.1% year over year for the fourth quarter. The restaurant level operating margin improved 100 basis points, rising to 26.6%. The fast casual chain’s net income rose 52.3% to $121.2 million.

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Food costs during the fourth quarter were 35% of revenue, a 110 basis point increase due to higher beef and dairy prices. The company’s menu price increases partially offset that increase.

For the full year, Chipotle Mexican Grill’s revenue rose 27.8% to $4.11 billion, while comparable restaurant stores rose 16.8%. The restaurant level operating margin improved 60 basis points, rising to 27.2% for the full year. The company’s full year net income rose 36% to $445.4 million, while diluted earnings per share increased 35% to $14.13.

For the full year, food costs were 34.6% of revenue, a 120 basis point increase due to higher prices for avocados, beef and dairy products. The company’s menu price increase partially offset that increase.

“Consumer trends are changing, which we believe is a great result of people becoming more discerning about where their food comes from, how it was raised, and how their meal was prepared,” said Chipotle Chairman and co-CEO Steve Ells in a statement. “The continued loyalty we see from our customers, as well as third party research, and the growing number of concepts imitating Chipotle, all point to the relevance of our vision and the impact we are having on food culture.”

Chipotle Mexican Grill provides guidance

Management said they expect same store sales to increase in the mid-single digits this year. The company also expects to open between 190 and 205 new restaurants this year.

Chipotle opened 192 restaurants during 2014 and 60 new restaurants during the fourth quarter.

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