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Chipotle Mexican Grill Inc CMG

Rating as of

Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Investors Should Sate Their Appetite Elsewhere For Now; Chipotle Shares Don't Look Appetizing

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Wide-moat Chipotle reported strong third-quarter earnings, with revenue ($2 billion) and adjusted earnings per share ($7.02) outpacing our $1.9 billion and $6.34 forecasts. The firm generated impressive comparable store sales growth, with a return of in-restaurant traffic (to 80% of pre-COVID-19 levels) and the retention of digital sales volumes (still 43% of the sales mix) driving 15.1% comps and 21.9% revenue growth from the year-ago period. We're encouraged by the incrementality of the digital business, allowing $3 and $3.5 million average unit volumes to be reached in 2024 and 2028, in our view. Nevertheless, we maintain our fair value estimate of $1,300 per share, as we balance time value of money with near-term margin headwinds, and view shares as overvalued.

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Company Profile

Business Description

Chipotle Mexican Grill is the largest fast-casual chain restaurant in the United States, with systemwide sales of $7.2 billion over the last twelve months. The Mexican concept is entirely company-owned, with a footprint of nearly 2,900 stores at the end of the third quarter of 2021 heavily indexed to the United States, though the firm maintains a small presence in Canada, the U.K., France, and Germany. Chipotle sells burritos, burrito bowls, tacos, quesadillas, and beverages, with a selling proposition built around competitive prices, high-quality food sourcing, speed of service, and convenience. The company generates its revenue entirely from restaurant sales and delivery fees.

Contact
610 Newport Center Drive, Suite 1300
Newport Beach, CA, 92660
T +1 949 524-4000
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 88,000

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