Chipotle surges after crushing earnings thanks to cheaper avocados

A
man sells avocados outside a food market in
Havana.
Desmond Boylan/Reuters
Pictures

Chipotle
surged more than 6% in after-hours trading Thursday after the
burrito chain posted earnings that topped Wall Street
expectations.

For the second quarter, Chipotle said it earned an adjusted $2.87
per share, while analysts had expected $2.76. It also posted
revenue of $1.267 billion, compared to the consensus Wall Street
estimate of $1.261.

Cheaper avocado prices were to thank for the extra earnings
power, the company said, citing food costs that were down 150
basis points to 32.6% of revenue.

Same-store sales, a closely watched metric for restaurant chains,
increased 3.3% over the same quarter in 2017.

“I’m pleased to report a solid second quarter with sales and
restaurant margins ahead of expectations,” Brian Niccol,
Chipotle’s CEO, said in a press release. “While we made progress
during the quarter with particular strength in digital sales, I
firmly believe we can accelerate that progress by executing our
reorganization and our strategy to win today and cultivate
tomorrow.”

Shares of Chipotle are up 60% since the beginning of the year,
but are still well off their high of more than $750 set in 2015
before a spate of food poisoning outbreaks sent the stock
spiraling as low as $247.

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