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Chipotle Mexican Grill Inc

CMG: XNYS (USA)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
$3,681.00ZhgsfXfwlvhvh

Chipotle Earnings: Consumers Swallow Rising Burrito Prices as Traffic Remains Robust; Shares Pricey

We plan to raise our $1,550 fair value estimate for wide-moat Chipotle by a mid-single-digit percentage after the firm reported surprisingly strong traffic and margin figures in its first-quarter earnings report, consistent with the market's reaction in afterhours trading. By any reasonable measure, the firm posted a blowout quarter, with $2.4 billion in sales and $10.50 in diluted EPS comfortably edging our $2.3 billion and $8.35 forecasts, respectively. Importantly, the firm's nearly 11% comparable store sales growth was balanced between check (7%) and traffic (4%), suggesting that despite double-digit price increases, the firm's value proposition hasn't yet outrun its core customer. Bolstered by moderating food costs and sales leverage, the Mexican fast casual chain also posted a restaurant-level margin beat, with a 25.6% figure healthily edging guidance of roughly 24% for the quarter.

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