Chipotle Earnings: Results in Line With Our Expectations Despite Selloff, Shares Remain Expensive

Wide-moat Chipotle posted second-quarter results in line with our expectations, with $2.52 billion in sales and $12.32 in diluted EPS aligning with our $2.55 billion and $11.92 expectations, respectively. With our forecasts for just north of 7% same-store sales and 8.3% unit growth falling within management's full-year guidance range, we expect to raise our $1,650 fair value estimate by a low-single-digit percentage, consistent with time value. The market's reaction was harsh, seeing shares fall 9% in aftermarket trading, but we view the drop as more reflective of unrealistic expectations than of any glaring shortcoming during the quarter. Shares trade at about an 11% premium to our revised intrinsic valuation.