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Research Alert: Cmg: Transaction Growth Returns; Margins Under Pressure

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-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

CMG posted Q1 EPS of $0.24, down 17% but in line with consensus, while revenue of $3.09B (+7.4%) beat the $3.06B consensus. Comparable sales growth of +0.5% beat an expected decline of 0.8%, led by +0.6% in transactions. In our view, maintaining steady transaction growth is more important than enduring near-term margin pressure, as this suggests CMG remains a relevant option for consumers despite tariff impacts. Management left its guidance unchanged, expecting flat comparable store sales growth in 2026 and projecting 350-370 new store openings. Restaurant-level margins contracted 250 bps on higher labor expenses (+10.5%) and food costs (+8.6%), reflecting the trade-off of limiting pricing to drive traffic. Digital mix improved to 38.6% and CMG opened 49 new stores. The company repurchased $700.8M of stock while generating healthy FCF of $471M (+14%). We believe CMG is being conservative given macro volatility. With loyalty initiatives in the pipeline, we think sequential transaction improvement is possible.

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