What happened
Shares of Chipotle Mexican Grill (CMG 2.41%) 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."
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.
