What happened
Shares of Chipotle Mexican Grill (CMG +2.21%) were moving lower today after a slight miss on the top line and modest guidance in its second-quarter earnings report cooled off the red-hot burrito stock.
As of 2:46 p.m. ET, the stock was down 9.6% on the news.
Image source: Chipotle.
So what
Chipotle's overall results in the second quarter were strong with comparable sales up 7.4% and revenue up 13.6% to $2.51 billion, which was slightly below estimates at $2.53 billion.
Profitability continued to improve with restaurant-level operating margin up 230 basis points to 27.5%, and overall operating margin increased from 15.3% to 17.2%.
The company also continued its expansion with 47 new restaurants opened in the quarter, 40 of which included a Chipotlane, Chipotle's drive-thru concept.
On the bottom line, adjusted earnings per share jumped 36% to $12.65, which topped expectations at $12.31.
CEO Brian Niccol said, "Chipotle's second quarter results demonstrate our ability to drive strong performance by focusing on exceptional food and exceptional people."
NYSE: CMG
Key Data Points
Now what
Chipotle stock was up about 50% year to date coming into the report, and the stock has gotten expensive as it's surged this year, which seemed to set it up for today's sell-off.
In its guidance for the third quarter, the company forecast comparable sales in the low- to mid-single-digit range, meaning they're expected to decelerate from the second-quarter mark.
Niccol also said the company was seeing a slowdown in delivery demand as business normalizes following the pandemic.
Following the sell-off, the stock now trades at a price-to-earnings ratio of 46, which is expensive for a restaurant stock. However, Chipotle has demonstrated its superiority time and again. It's still a good bet to outperform the market over the long term.
