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Many Growth Levers Available to Chipotle

Third-quarter sales trends raise some questions, but the company’s narrow moat is still intact, writes Morningstar's R.J. Hottovy.

Like last quarter, the key question coming out of

We're not planning meaningful changes to our $675 fair value, with only modest adjustments to our comp and store opening assumptions (management plans to open 220-235 new restaurants next year, slightly ahead of our forecast and likely establishing a new baseline for annual unit growth). We also believe the company is still positioned to deliver restaurant and operating margins of 28% and 19%, respectively, for the full year (with lower food costs helping to offset higher labor costs), and exceed 30% and 22% over the next five years, keeping Chipotle among industry leaders.

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About the Author

RJ Hottovy

Sector Strategist
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R.J. Hottovy, CFA, is a consumer strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is responsible for consumer discretionary and staples research. He has covered the consumer sector as an analyst and director of global consumer equity research for Morningstar since joining the company in 2008, and specializes in a broad range of consumer categories including restaurants, footwear and apparel retailers, consumer electronics retailers, fitness clubs, home improvement and furnishing retailers, and consumer product manufacturers.

Before joining Morningstar, Hottovy was a director and senior stock analyst for Next Generation Equity and an analyst for William Blair & Co., specializing in a wide range of retail and consumer product companies. He also spent two years at Deutsche Bank, covering waste management, water utilities, and equipment rental stocks.

Hottovy holds a bachelor’s degree in finance and a second degree in computer applications from the University of Notre Dame, where he graduated magna cum laude. He also holds the Chartered Financial Analyst® designation and is a member of the CFA Institute and the CFA Society of Chicago.

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