[video] Chipotle Soars: What Wall Street Says
NEW YORK (TheStreet) - Shares of Chipotle Mexican Grill
The Denver-based burrito chain said late Thursday that fourth-quarter comparable restaurant sales were up 9.3% year-over-year, double the growth rate a year earlier and far exceeding the 6.7% rise anticipated by estimates provider Consensus Metrix.
Chipotle said fourth-quarter net income jumped 29.8% to $79.6 million, or $2.53 a share, in line with the consensus estimate. Revenue of $844.1 million beat expectations among analysts polled by Thomson Reuters by $17.8 million and were up 20.7% from the fourth quarter of 2012, driven by increased traffic in stores.
Looking ahead, management expects 2014 comparable restaurant sales growth in the low to mid single-digit range, excluding menu price increases.
Earlier this week, Chipotle launched "Farmed and Dangerous," a satirical comedy series that will be on Hulu and Hulu Plus starting Feb. 17 that "explores the world of industrial agriculture in America."
This four-episode series is sure to be filled with suspense and plenty of entertainment, all while attempting to show Chipotle's view on sustainable agriculture and against genetically modified foods. Chipotle said last year that it was moving to a GMO-free menu, which could place pressure on food pricing and is one of the reasons it's been hinting at a menu raise.
TheStreet's Jim Cramer is a fan of Chipotle."Lots of times people ask me how a stock can jump so much in one particular day. Usually I have to talk about gross margin inflection points or shrinking to grow or some sort of fancy explanation involving a cut in capital expenditures at the same time as an acceleration in revenue," Cramer wrote in an article, Chipotle's Simple Winning Ways. "Then Chipotle will come along and make it all so easy. It just sold a ton more burritos than you thought it could."
Here's what others on Wall Street are saying about Chipotle today:
Lynne Collier, Sterne Agee (Buy; $603 PT)
"We continue to believe that CMG has the best business model created in the restaurant industry to date. Despite weather, same-store sales accelerated to 9.3% in 4Q and underlying trends remain similar in 1Q thus far. Overall, we believe the continued sales momentum is a testament to the strength of the Chipotle model. Assuming a price increase in late '14, we see margin expansion further driving earnings, and we continue to believe that the runway for unit growth remains vast."
"Menu Price Update: While a menu price increase is not certain, management indicated that with food costs at current levels, it is likely that the Company will increase prices in 3Q. We expect the Company to time the price increase along with the adoption of exclusively GMO-free ingredients, which should be in place by the end of FY14. We continue to believe a price increase would be in the range of 3-5% and that an increase in the 4% range could drive restaurant-level margins higher by approximately 250 bps (to record levels). We continue to believe that CMG has significant pricing power as we believe that the brand's menu pricing is below its peers."