Where's The Pork? Chipotle And The 'Pork Shortage'
- Chipotle's announcement.
- A pork shortage- Lean hog prices have cratered.
- Is it China?
- Is there more to this story-the terrorist angle.
- Chipotle is an expensive stock.
- The recent decision by Chipotle to stop serving pork at 600 restaurants nationwide raises concerns about its ability to maintain high standards while continuing to expand.
- This decision comes after its 2013 decision to serve conventionally raised beef since there was not enough antibiotic and hormone free beef available.
- As Chipotle continues to grow, maintaining its mission of "food with integrity" will be an expensive challenge.
- If it is unable to maintain its "food with integrity" standards, then this could potentially cause a consumer backlash and cut into its future growth.
- After years of additional growth after 2012, management is giving us familiar cues that the stock has overheated.
- The all-important year-on-year comparables simply can't stay in double-digit territory forever.
- Once again, we feel that it's time to rotate out of CMG, waiting for a more reasonable price.
Future Growth Opportunities For Chipotle
- Strong Q3 comps growth and EPS growth.
- Remarkable net unit growth and an upsurge in consumer traffic.
- Increased focus on new sales initiatives stemming from a growing catering program, new marketing campaigns, and the diversification of menu items.
- Very few other firms are growing as fast as Chipotle on a same-store sales basis.
- The company is priced to perfect execution, but perfection can never be attained.
- Chipotle's equity price will continue to be volatile, and any fundamental slip up may send shares tumbling.
- While revenue and EPS growth will moderate from current (3Q14) levels in 2015, Chipotle will continue to grow at an aggressive pace.
- Nearly 250 new restaurant opening in the next 15 months (4Q14 and 2015) will boost revenue and EPS growth for 2015 as well as 2016.
- Healthy menu offering is the key differentiating factor for Chipotle and robust comparable restaurant sales growth is an indication of increasing consumer acceptance of offering.
- High financial flexibility ensures that funding is not a constraint for new restaurant opening in 2015.
Why Chipotle Mexican Grill Still Looks Interesting
- Chipotle Mexican Grill reported blockbuster quarter, wherein both revenue and earnings surged.
- Expansionary measures, higher traffic and new concept stores are driving sales higher.
- Despite being expensive, Chipotle's valuation numbers ensure growth in the future.
Chipotle Mexican Grill's Super Light Guidance: Cause For Concern Or Par For The Course?
- Despite awesome earnings, CMG issued extremely weak 2015 guidance compared to 2014.
- CMG has a history of being extremely conservative.
- You might as well completely ignore its 2015 guidance based on history.
- Chipotle had an awesome quarter with its profits, revenue and same-store sales increasing exorbitantly.
- Going forward new store openings will fuel growth.
- The concept of good food and better ambiance offered by Chipotle is being loved by its customers.
ModernGraham Quarterly Valuation Of Chipotle Mexican Grill Inc.
- CMG is suitable for Enterprising Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is overvalued at the present time.
- The market is implying 26.13% earnings growth over the next 7-10 years, a rate that is unlikely to be achieved over such a long term period.
- Chipotle is a strong business with a large moat which will be very profitable for years to come.
- The stock has risen over 100% in the past two years.
- While it is still ahead of the competition the current valuation does not justify buying the stock at current prices.
Have Investors Overreacted To Chipotle's Q3 Earnings Report?
- Chipotle is undervalued - Most analysts agree that CMG’s $608 price tag is low compared to value, indicative of great upside potential.
- The brand is growing - Chipotle’s solid branding strategy will add to its considerable forward momentum in the coming quarters.
- The bellwethers are strong - Sellers should react to the restaurant’s massive forward momentum and analysts’ near-unanimous agreement in Chipotle’s overall value.
- Doubt is misplaced. Investors panicked at Chipotle´s lackluster response to its own success, but should focus instead on its strong performance.
Update: Chipotle Reports Great Results, Still Too Expensive
- Chipotle's earnings release was very convincing: Revenues are up 31%, EPS are up 56%.
- In my original thesis I had forecasted ongoing revenue and earnings growth.
- Chipotle still has a high valuation, the trailing earnings multiple is 48.
- With this result I remain with my original thesis: Chipotle is a company with great growth prospects, but too expensive at the current price.
Chipotle Mexican Grill's Management Subtly Hints It Needs To Up Its Game For Future GrowthJayson Derrick • Oct. 23, 2014
- Chipotle Mexican Grill reported perhaps its best quarter ever as a public company.
- Expectations for near-term growth were not met.
- Investors need to focus on long-term initiatives, not quarterly metrics.
- Chipotle Mexican Grill reported an astounding quarter this week, beating Wall Street expectations while growing EPS at a 56% rate.
- Yet CMG shares sank on the first trading day after the news, falling 7% because of the company's very conservative same-store sales guidance for 2015, a markdown from 2014.
- Considering the company's astounding operating execution and likely conservative guidance, its valuation is not excessive. Investors should consider the shares as they settle after the latest market volatility fades.
Update: Chipotle Gets Smacked In Spite Of Spectacular Earnings GrowthAurium Investments • Oct. 22, 2014
- Chipotle reported extremely strong Q3 results, with 31% revenue and 56% EPS growth.
- Same store sales were up 19.8%, continuing the acceleration seen in past quarters.
- However, weak FY15 guidance led to a sell-off in the stock.
- Stock appears to be fairly valued, given growth headroom and operational performance.
Chipotle Mexican Grill, Inc. Quarterly Earnings Analysis
Chipotle Mexican Grill Q3 2014 Review: A Sizzling Quarter
- CMG beat on both EPS and revenue on strong comps.
- Food inflation up but was offset by price hike.
- Continues to be the favorite among the QSRs. Reiterate bullish view.
Oct. 20, 2014, 4:08 PM
- Chipotle (NYSE:CMG) reports comparable-restaurant sales rose 19.8% in Q3.
- Restaurant-level operating margin +200 bps to 28.8% as sales leverage overrode higher beef and avocados pricing.
- The company notes the quarter included a full month of higher menu prices.
- Food costs ratio +70 bps to 34.3%.
- Store count +43 to 1,724.
- 2014 guidance: The outlook is for a mid-teens comparable-restaurant sales growth mark. 180 to 195 new restaurant openings anticipated.
- 2015 guidance: The company expects a low to mid-single digit comp as it starts lapping the quarters with price hikes. 190 to 205 new restaurants are forecast to be opened.
- CMG -2.2% AH.
Oct. 20, 2014, 4:03 PM| 9 Comments
Oct. 20, 2014, 1:49 PM
- Shares of Chipotle (CMG +1.2%) trade higher heading into the company's Q3 earnings release after the bell today.
- Analysts expect EPS of $3.84 on revenue of $1.06B.
- The read from the restaurant operator on beef costs for Q4 and into 2015 will be closely watched.
- Chipotle has already posted a pair of post-earnings rallies this year after reporting a sizzling pace of comparable-restaurant sales of 13.4% in Q1 and 17.3% in Q2. The forecast for Q3 is for another double-digit comp.
- Chipotle earnings preview
Oct. 19, 2014, 5:35 PM
Jul. 22, 2014, 12:12 PM
- "With most restaurants struggling to drive positive traffic, CMG remains an anomaly, justifying an outsized valuation, with scarcity worth the premium," says Barclays in response to Chipotle's (CMG +12.8%) big Q2 beat. However, the firm is hesitant to recommend shares, given they now trade at 39x forward EPS.
- "As more of Chipotle’s markets are touched with menu price increases this quarter, the company is teed up for at least another two quarter of strong earnings growth," thinks Belus Capital.
- The company attributes only 250 bps of its 17.3% same-store growth (blew away a consensus of 10.5%) to its price hikes. Average transactions during peak lunch and dinner hours each rose by 8 Y/Y, and average check size rose by 5%, thanks partly to larger group sizes.
- Chipotle did admit on its CC (transcript) its price hikes led to a "slight shift" among customers from steak to chicken, but insists "customers have generally responded well" otherwise. The company also noted it's experimenting with take out-focused restaurants that have limited seating, particularly in U.S./European locales with high real estate costs.
- Prior Chipotle earnings coverage
Jul. 21, 2014, 4:30 PM
- With the help of its price hikes, Chipotle's (NYSE:CMG) same-store sales rose 17.3% Y/Y in Q2, a marked improvement from Q1's 13.4% clip and fueling a big Q2 beat.
- The company now expects mid-teens 2014 same-store growth, up from prior guidance of high-single digit growth. It still forecasts 180-195 new 2014 restaurant openings.
- Restaurant level op. margin was 27.3%, -30 bps Y/Y but +140 bps Q/Q. Food costs were 34.6% of revenue vs. 34.5% in Q1 and 33.1% a year ago. But labor costs -90 bps Y/Y to 21.8%, and occupancy costs -50 bps to 5.4%. G&A costs +90 bps to 7.1% of revenue.
- 45 new restaurants were opened, raising total count to 1,681.
- Q2 results, PR
Jul. 21, 2014, 4:05 PM| 5 Comments
Jul. 20, 2014, 5:35 PM
Apr. 17, 2014, 8:01 AM| 2 Comments
Apr. 17, 2014, 12:05 AM
Apr. 16, 2014, 5:30 PM
Jan. 30, 2014, 4:08 PM
- Chipotle (CMG) reports comparable store sales rose 9.3% in Q4, up 310 bps Q/Q and over double last year's Q4 pace.
- Restaurant-level operating margin rose 100 bps to 25.6%. Lower marketing costs helped to offset a jump in food costs.
- The company added 56 outlets to take its store count to 1,595.
- The outlook for 2014 is for mid single digit comp sales growth and 180-195 new restaurants.
- CMG +10.9% AH
Jan. 30, 2014, 4:04 PM| Comment!
Jan. 30, 2014, 12:10 AM| 2 Comments
Jan. 29, 2014, 5:35 PM| Comment!
Oct. 17, 2013, 6:17 PM
- Chipotle (CMG) states on its Q3 CC it's open to raising prices in mid-2014 to offset higher food costs. The fast-casual Mexican chain stated in its Q3 report it expects low-single digit same-store growth in 2014 in the absence of price hikes.
- Chipotle has also guided for Q4 same-store sales to be similar to, or slightly better than, Q3's 6.2%.
- Food costs accounted for 33.6% of Chipotle's Q3 revenue, up from 33.1% in Q2 and 32.6% a year earlier.
- CMG now +8% AH. Q3 results, details.
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