The stock of Chipotle Mexican Grill (CMG) is down 10% after the restaurant chain lowered its forecast for same-store sales growth this year as consumers pull back on their discretionary spending.
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For this year’s second quarter, the company known for its burritos and other Mexican cuisine reported earnings per share (EPS) of $0.33, which was in line with Wall Street’s forecasts. However, revenue in the period totaled $3.06 billion, which was below the $3.11 billion expected among analysts who track the company’s progress. Sales were up 3% from a year earlier.
Looking ahead, Chipotle’s management team said they anticipate flat same-store sales growth for all of this year. That’s worse than previous projections that called for a low-single digit percentage increase. This is the second consecutive quarter that Chipotle has trimmed its same-store sales outlook, sending its stock price lower.
Chipotle’s net income. Source: Main Street Data
Poor Outlook
Chipotle Mexican Grill’s same-store sales shrank 4% during Q2, worse than last quarter’s decline of 0.4%. Wall Street had been looking for a same-store sales decrease for the second quarter of 2.9%. The average check at the company’s restaurants increased 1%, partially offsetting consumer traffic declines of 4.9% during the quarter.
Since December of last year, Chipotle has grappled with weakening sales. Management has said that consumer worries about the economy have led them to skip restaurant visits and count their pennies instead. Despite lowering its same-store sales guidance, Chipotle reiterated that it plans to open between 315 and 345 new restaurants in 2025.
CMG stock is down 13% on the year.
Is CMG Stock a Buy?
The stock of Chipotle has a consensus Moderate Buy rating among 27 Wall Street analysts. That rating is based on 20 Buy and seven Hold ratings issued in the last three months. The average CMG price target of $60.96 implies 16.38% upside from current levels. These ratings are likely to change after the company’s financial results.
