Chipotle's Q4 Results Beat Expectations

Natural-food burrito chain Chipotle's Mexican Grill finished its first year as a public company by beating forecasts with a more-than-doubling of Q4 profit. Net income rose to $10.8 million ($0.33/share) from $4.3 million ($0.16/share) a year earlier, ahead of the Street expectation of $0.28. Full-year EPS were $1.28. Revenue spiked 27% to $219.7 million from $173.3 million, beating analyst forecasts of $216.4 million. Same-store sales were up 10.1%. Operating margins rose 170 basis points to 20.3% on higher average restaurant sales and menu price increases for the company's naturally raised chicken, beef and pork offerings. This year, Chipotle plans to add 95-105 new restaurants to its current 570. Margins might be pressured in the short term by higher avocado prices resulting from a cold snap in California and by higher grain prices, which are elevating chicken prices. Chipotle's was spun off last year by McDonald's, and its share price has nearly tripled since the IPO. It is trading at about 39x analysts' 2007 earnings estimate versus a multiple of 20x for its rivals. Chipotle shares rose 4.4% to $64.10 in AH trading after the report.

Sources: TheStreet.com, Press release, Reuters, Business Week
Commentary: Chipotle Mexican Grill: A Close Look • Chipotle Mexican Grill: A Distinguished Spin-off With Great Potential • By Spinning Off Chipotle Entirely, Has McDonald's Given Up on Growth?
Stocks/ETFs to watch: Chipotle Mexican Grill Inc. (CMG), McDonalds Corp. (MCD). Competitors: Yum! Brands Inc. (YUM), Wendy's International (WEN), Burger King Corp (BKC). ETFs: PowerShares Dynamic Food & Beverage (PBJ)

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