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TheStreet Open House

Chipotle (CMG) Wraps Up Quarter with 29% Profit Growth

NEW YORK (TheStreet) -- Chipotle (CMG) spiked in post-market trading after comparable-store sales and fourth-quarter results easily beat analyst expectations. After the bell, shares soared 9.5% to $541.

In the December-ended quarter, Chipotle reported comparable restaurant sales growth of 9.3%, double last year's fourth quarter, and far exceeding the 6.7% rise anticipated by estimates provider Consensus Metrix.

The fast-casual burrito chain recorded net income 29.8% higher at $79.6 million, or $2.53 a share. Revenue enjoyed a 20.7% year-over-year increase to $844.1 million, driven by increased traffic in stores. Earnings came in as analysts surveyed by Thomson Reuters had expected, but revenue beat estimates by $17.8 million.

Operating margin increased 100 basis points to 25.6% in the quarter, a result of positive sales leverage and lower marketing costs. Food costs, which account for 33.9% of revenue, increased 40 basis points over the quarter on increasing avocado costs, offset slightly by lower dairy and steak expenses.

Over fiscal 2013, the Denver-based business saw net income of $327.4 million, or $10.47 a share, an increase of 17.8% compared to 2012. Revenue jumped 17.7% to $3.21 billion. Analysts had expected earnings of $10.48 a share on $3.2 billion in revenue.

Looking ahead, management expects 2014 comparable restaurant sales in the low- to mid-single digit range, excluding menu price increases.

TheStreet Ratings team rates CHIPOTLE MEXICAN GRILL INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate CHIPOTLE MEXICAN GRILL INC (CMG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

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