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Chipotle Mexican Grill Inc - Stock Quote CMG

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Morningstar's Chipotle Mexican Grill Inc Stock Analysis

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Surprisingly Resilient Wide-Moat Chipotle Continues to Impress, but Shares Look Fully Valued

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

In the face of industry headwinds, wide-moat Chipotle reported strong first-quarter earnings, with $2.02 billion in sales and $5.70 in adjusted EPS slightly exceeding Factset consensus estimates of $2.01 billion and $5.64, respectively. Restaurant margin pressure was unsurprising, with 12%-13% inflation in the food basket proving difficult to pass through in real-time—but a 4% price increase in the quarter, pushing menu prices about 10% higher than a year ago, suggests that guidance for a strong restaurant margin rebound (to 25%) over the summer is plausible. After balancing near-term food cost pressure with strong top line results and muted administrative expenses, we expect to raise our $1,510 fair value estimate by a low-single-digit percentage, broadly consistent with the time value of money.

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Chipotle Mexican Grill Inc's Company Profile

Business Description

Chipotle Mexican Grill is the largest fast-casual chain restaurant in the United States, with systemwide sales of $7.5 billion in 2021. The Mexican concept is entirely company-owned, with a footprint of more than 3,000 stores, 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.

610 Newport Center Drive, Suite 1400
Newport Beach, CA, 92660
T +1 949 524-4000
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 97,660

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