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Chipotle Mexican Grill Inc

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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation

Chipotle Earnings: Strong Transaction Performance Outweighs Expected Inflation Headwinds

Wide-moat Chipotle posted strong third-quarter results, with $2.47 billion in sales and $11.32 in diluted EPS beating our $2.46 billion and $10.26 estimates, respectively. The earnings outperformance is reflective of both better-than-expected comparable store sales (up 5% annually, against our 3.5% estimate) and slightly lower-than-expected food cost inflation. As we balance comparable sales outperformance, strong restaurant margins, and expectations for elevated prime cost inflation in 2024, we expect to raise our $1,720 fair value estimate for the Mexican food chain by a mid-single-digit percentage, leaving shares fairly valued.

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