Chipotle Mexican Grill, Inc. Quarterly Earnings Analysis
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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.
- Chipotle beat Q3 earnings estimates but has fallen in after hours trading, as management guided for slower growth.
- This reduced growth outlook has cemented my bearish outlook on Chipotle.
- In my previous article, I discussed how Chipotle could not grow enough to sustain its lofty PE multiple.
- Shares of Chipotle fell despite reporting revenue and earnings that beat analysts' forecasts as future growth concerns gripped hold of investors.
- This confirms my opinion that, while the company's potential is significant, its shares might be trading at too hefty a multiple.
- In my previous work on the business, I did not anticipate its results but I did say that investors should remain somewhat cautious about the company moving forward.
Update: Chipotle's Growth Outlook Leaves A Lot To Be Desired
- CMG beat estimates but 2015 guidance was very weak.
- This confirms my near-term bullishness on CMG, long term bearishness.
- I anticipated great earnings and a bad outlook eventually.
Chipotle Mexican Grill Q3 2014 Preview: Get Ready For A Sizzling Quarter
- Chipotle Mexican Grill will report Q3'14 earnings after market on Monday.
- I will be a buyer of the stock, as it is one of few quality QSRs that is positioned to benefit from high-income earners.
- 47x forward earnings is not cheap, but quality usually comes at a price.
There's Risk In Holding Chipotle Through Earnings
- Chipotle is set to report on Monday after the close of market.
- Analysts are expecting the casual dining chain to report EPS of $3.84 on $1.06 billion in revenue.
- Pressure is on the downside for this report; there is risk in holding long going into this report.
Why I Like McDonald's Better Than Chipotle (And Yes, I Have Taste Buds)
- Find out how to compare a fast-growing business like Chipotle to a well-established dividend stock like McDonald's.
- Chipotle and McDonald's both operate in the competitive fast dining category.
- McDonald's has had a terrible sequence of negative events over the last 3 months, pushing the stock down 9% in the same time period.
Could Chipotle Pull A Netflix This Monday And Tank?
- NFLX was priced for perfection. Expectations were at an all-time higher. Perfection didn’t happen. It tanked.
- CMG is priced for perfection. Expectations are at an all-time high. It may tank.
- Contrarian thinking plus weak market says short into earnings – risk of a short is less than potential gain.
- Chipotle Mexican Grill (CMG) is slated to report 3Q 2014 earnings after the close of trading on Monday, October 20th.
- Earnings Per Share: The current Street estimate is $3.83 (range $3.55 to $4.18).
- Revenues: Analysts expect an increase of 28.2% y/y to $1.06 bln (range $1.01 bln to $1.08 bln).
Investors Might Want To Remain Only Cautiously Optimistic About Chipotle As Earnings Near
- In recent years, Chipotle has had a pretty impressive run, far outpacing Panera, McDonald's and Yum!
- Add to this the fact that analysts expect the party to continue and buying shares of the business may seem like a no-brainer.
- However, with Chipotle's stock trading at a hefty multiple still, now might be a time when investors may want to be somewhat cautious.
- Instead of compromising its quality the company has considerably controlled its SG&A expenses to improve its bottom line.
- Chipotle plans to open a total of 180 to 195 new restaurants by the end of the current fiscal year.
- The company has marginally reduced the share count dilution from 32 million shares to 31 million in FY2013.
Will Record Q3 Earnings Push Chipotle Mexican Grill To Fresh 52-Week Highs?
- Exceeded Q2 expectations by a wide margin, causing its stock to rise 11.84%.
- Q3 earnings are scheduled to be released on October 20.
- Analysts currently expect double-digit growth.
Does This Isolated Incident Spell Bigger Trouble For Chipotle?
- Managers at one Chipotle store in Pennsylvania walked out in protest of “borderline sweatshop conditions”.
- The episode was at least a little shocking, given Chipotle's emphasis on building a strong "people culture".
- This is an isolated incident. But with Chipotle making faster throughput a key component of its growth plan, it's one that should grab investors' attention.
- Chipotle has pretty good financial efficiency ratios.
- I booked profits in the stock because I felt the overall market is struggling right now.
- I'm looking to buy some burritos from Chipotle on the profits, and possibly back into the stock shortly.
Chipotle: Great Fundamentals And Growth Prospects, High Valuation
- Chipotle's fundamentals look good: High returns on capital with no debt.
- Chipotle has great growth prospects: Domestically, in Europe and with new restaurant concepts such as its ShopHouse brand.
- Chipotle is valued at a very high level right now, I won't buy at this level.
Ignore Chipotle Wage Protests, The Company Will Be Just Fine
- Reports of an employee walkout in Pennsylvania are getting much more attention than they should be.
- This is a single case that will have zero bearing on Chipotle going forward.
- We're a bit wary of Chipotle's valuation, but consider the stock a HOLD at these levels.
- Chipotle’s stock price performance has remained solid and has returned around 66.31% in the last year.
- Recently, a positive note issued by Cleveland Research Co. grabbed the investors’ attention and as a result Chipotle approached a $700 stock price for the first time.
- In the third quarter, Chipotle is expected to show strong same store sales growth.
Yesterday, 9:44 AM
- Execs with Chipotle (CMG -4.2%) say they see adding 190 to 205 restaurants next year as a "sensible" growth rate, but decline to give store count guidance beyond 2015.
- Comp sales growth of close to 20% was achieved mainly through traffic increases (not pricing). Chipotle's comp gain would have been slightly higher if not for a customer trade down from steak to chicken during the quarter.
- No surprise, but the company warns the sizzling comp growth numbers are likely to fall back as the company laps quarters which included price hikes.
- The company says it plans to open a small number of grocery restaurants in 2015.
- Though checkout speed has been impressive for Chipotle compared to peers, management still sees room for improvement. The average restaurant turns over just a third of the high end mark of 350 transactions per hour.
- There's no plans to roll out Apple Pay capabilities at stores.
- Earnings call transcript
Mon, Oct. 20, 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.
Thu, Aug. 21, 9:22 AM| 2 Comments
Tue, Jul. 22, 12:47 PM
Tue, Jul. 22, 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
Tue, Jul. 22, 9:14 AM
Mon, Jul. 21, 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
Mon, Jul. 21, 4:05 PM| 5 Comments
Wed, Apr. 30, 9:21 AM
- Shares of Noodles (NDLS) and Panera Bread (PNRA) trade lower in premarket action after the fast-casual restaurant chains fail to come anywhere close to matching the double-digit comparable-sales growth that Chipotle (CMG) churned up for the first quarter.
- Restaurant sector analysts have noted that speed of service and simplicity of menu are two significant factors in the segment.
- Panera Bread is addressing its "mosh-pit" order pickup issue, while Noodles thinks it can regain traffic to bring scale back into play for margin expansion.
- Execs with both companies made a strong case during their earnings calls that Q1 results were due to transitory or one-time factors.
- Conference call transcripts: NDLS, PNRA
- Premarket: NDLS -6.5%, PNRA -5.6%, CMG -0.3%
Mon, Mar. 24, 2:38 PM| 19 Comments
Fri, Jan. 31, 12:46 PM
Fri, Jan. 31, 9:09 AM
Thu, Jan. 30, 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
Thu, Jan. 30, 4:04 PM| Comment!
Fri, Jan. 24, 7:46 AM| Comment!
Oct. 17, 2013, 5:42 PM
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