Food stock under pressure: Chipotle Mexican Grill, Inc. (NYSE: CMG)

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Chipotle Mexican Grill, Inc. (NYSE: CMG) stock fell over 4.4% on 23rd October, 2019 (as of 9:51 am GMT-4 ; Source: Google finance) impacted by third quarter of FY 19 on the back of expected falling price of avocados and its carne asada, which the company introduced in September. The company’s food, beverage and packing costs declined 0.2% to 33.2% of revenue due to national menu price increases partially offset by the higher costs of “several ingredients.”

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Chipotle has reported third-quarter net income of $98.6 million compared with $38.2 million in the year-ago period. For the third quarter, the company has reported 11% comparable restaurant sales growth that included nearly 7.5% transaction growth. The company has posted Restaurant level margins of 20.8%, which is 210 basis points higher than last year.

CMG in the third quarter of FY 19 has reported the adjusted earnings per share of $3.82, while adjusted revenue growth of 14.6 percent to $1.4 billion in the third quarter of FY 19. For the fourth quarter, the analysts are projecting the earnings to be of $2.90 a share and sales to be of $1.38 billion. The company expects the fourth quarter comps to be in the high single-digit range. This will result in the 2019 full year comp guidance to be at the top end of the high-single digit range.

In addition, CMG expect the total openings for 2019 to be at or slightly below the low end of the 2019 range of 140 to 155 openings. In 2020, the company project opening to be between 150 and 165 new restaurants with more than half including a Chipotlane. The company expects these openings will be better balanced throughout the year with about 60 openings in the first half of the year compared to only 35 openings for June of this year. For Q4, the company expect ongoing moderation in avocado pricing due to increasing supply in the back half of the quarter, which is expected to be largely offset by the higher cost of Carne Asada resulting in cost of sales remaining in the low to mid 33% range. CMG expect for the fourth quarter, the labor costs to be in the high 26% range given extra initial labor expenses associated with a significant number of new restaurants being opened in this quarter, as well as lower seasonal sales in the fourth quarter.

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