An encouraging update from CMG overnight, delivering a better second-quarter result and upgraded its full-year sales outlook. The stock was up +2% in normal hours however the result landed post close, with the shares rallying ~5% after hours.
Revenue rose 9.3% to US$3.35 billion, while adjusted EPS of US33c was slightly ahead of expectations. Comparable sales increased 2.2%, an improvement from just 0.5% in the first quarter, supported by both higher customer traffic and a larger average transaction.
Key highlights:
- Comparable sales rose 2.2%.
- Transactions increased 1%.
- Average cheque increased 1.2%.
- 100 new company-operated restaurants opened.
- FY26 comparable-sales guidance upgraded to low-single-digit growth from roughly flat.
The main pressure point remains margins. Restaurant-level margins fell to 25.2% from 27.4% as higher beef, freight and labour costs outpaced menu-price increases, but overall, the recovery is becoming more credible, with growth coming from both traffic and spending rather than price alone. The upgraded outlook is encouraging, although Chipotle still needs to show that stronger sales can translate into better earnings as cost pressures persist. We continue to hold the stock.
MM remains bullish CMG US ~$34
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