Chipotle beats on earnings and sales, stock spikes

Chipotle on Tuesday reported first-quarter sales and earnings that topped Wall Street’s expectations.

The Mexican fast-casual restaurant chain said it earned $US1.60 per share and revenues totaling $US1.07 billion. Analysts had expected Chipotle to report adjusted earnings per share of $US1.29 on revenue of $US1.05 billion, according to Bloomberg.

Same-store sales, at restaurants open for at least one year, rose 17.8% (15.5% forecast.)

The company is still working to turnaround sales after an E. coli outbreak was linked to its food in 14 states in late 2015. Chipotle hired food-safety experts to scrutinize its practices and gave away free food to lure customers back.

Chipotle confirmed last week that it raised prices by about 5% in about 20% of its locations after hinting that the hikes were coming.

Some analysts have raised questions about whether Chipotle’s stock is overvalued after a 25% surge since the start of the year. According to Morgan Stanley and Oppenheimer, the company will need to achieve EPS of at least $US20 over teh next three years to justify the current price, although they see that as unlikely.

As the shares rose this year, bets against it also climbed. Short interest has risen $US296 million this year, according to financial-analytics firm S3 Partners. The current short interest total of $US2.2 billion represents about 16% of shares outstanding.

Chipotle shares rose by as much as 6% in after-hours trading.

More to come …

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