Q2 Winners and Losers: Chipotle (NYSE:CMG) vs. the Rest of Modern Fast Food Stocks
Quarterly earnings are a good time to assess a company’s progress, especially relative to its industry peers. Today, we take a look at Chipotle (NYSE:CMG) and the best and worst performers in the modern fast-food industry.
Modern fast food is a relatively new category that falls somewhere between traditional fast food and sit-down restaurants. These establishments offer a more varied menu at higher prices than traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers who value quality. These restaurants capitalize on the perception that your drive-thru burger and fries restaurant is detrimental to your health due to inferior ingredients.
All 6 modern fast food stocks we track had a strong second quarter, with revenue beating analyst consensus estimates by 1.5% on average. Inflation has been moving toward the Fed’s 2% target by the end of 2023, leading to strong stock market performance. 2024 has been more eventful, with the market swinging between optimism and pessimism around rate cuts due to mixed inflation data, but modern fast food stocks have performed well, with share prices up 10.5% on average since their previous earnings results.
Chipotle (NYSE:CMG)
Born from a desire to offer fast food with fresh, flavorful ingredients, Chipotle (NYSE: CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable menu items.
Chipotle reported revenue of $2.97 billion, up 18.2% from a year earlier and beating analysts’ expectations by 1.1%. Overall, it was a very good quarter for the company, impressively beating analysts’ gross margin estimates and narrowly beating their earnings estimates.
“The second quarter was an exceptional one as the success of brand marketing, including the return of Chicken Al Pastor, generated strong demand in our restaurants. Our focus and training on throughput paid off as we were able to meet higher demand trends with exceptional service and speed, driving transaction growth of more than 8% in the quarter,” said Brian Niccol, Chipotle’s chairman and CEO.
The stock is up 7.4% since the report and is currently trading at $55.60.
We think Chipotle is a good deal, but is it a good buy today? Read our full report here, it’s free.
Best Q2: Potbelly (NASDAQ:PBPB)
With a unique origin story where the company started as an antique store, Potbelly (NASDAQ: PBPB) is today a chain known for its grilled sandwiches.
Potbelly reported revenue of $119.7 million, down 5.5% from a year earlier, in line with analysts’ expectations. It was a very good quarter for the company, with impressive results and solidly beating analysts’ estimates for both gross margin and earnings.
The market seems pleased with the results as the stock is up 5.3% since the results were released. It is currently trading at $7.21.
Is Now the Time to Buy Potbelly? Access our full financial analysis here, it’s free.
Soft Green (NYSE:SG)
Founded in 2007 by three Georgetown University alumni, Sweetgreen (NYSE: SG) is a fast-casual restaurant chain known for its healthy salads and bowls.
Sweetgreen reported revenue of $184.6 million, up 21.1% from a year earlier and beating analysts’ expectations by 2.1%. It was a mixed quarter for the company, with gross margin well above analysts’ estimates but earnings below analysts’ estimates.
Interestingly, the stock is up 32.9% since the earnings release and is currently trading at $34.90.
Read our full analysis of Sweetgreen’s results here.
Noodles (NASDAQ:NDLS)
Featuring pasta, mac and cheese, pad Thai and more, Noodles & Company (NASDAQ: NDLS) is a casual dining restaurant chain that serves all kinds of noodles from around the world.
Noodles reported revenue of $127.4 million, up 1.8% from a year earlier and falling 2.6% short of analysts’ expectations. Looking back, it was a weaker quarter for the company, with full-year revenue guidance falling short of analysts’ expectations and analysts’ earnings estimates.
Noodles posted the weakest performance relative to analyst estimates and the smallest full-year forecast update among its peers. The stock is up 2.1% since the release and is currently trading at $1.49.
Read our full, actionable report on Noodles here, it’s free.
Shake Shack (NYSE: SHAK)
Launched as a hot dog stand in New York City’s Madison Square Park, Shake Shack (NYSE: SHAK) is a fast food restaurant known for its hamburgers and milkshakes.
Shake Shack reported revenue of $316.5 million, up 16.4% from a year earlier, in line with analysts’ expectations. Overall, it was a very good quarter for the company, with gross margin and earnings significantly above analysts’ estimates.
The stock is up 16.9% since the report and is currently trading at $102.39.
Read our full, actionable report on Shake Shack here, it’s free.
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