In its December-ended quarter, the fast-casual burrito chain recorded comparable restaurant sales growth of 9.3%, well over the year-ago quarter's 3.8% increase, and far exceeding a 6.7% rise anticipated by estimates provider Consensus Metrix.
Fourth-quarter net income soared 29.8% to $79.6 million, or $2.53 a share, while revenue enjoyed a 20.7% year-over-year increase to $844.1 million. Earnings were as expected by analysts surveyed by Thomson Reuters, but revenue beat estimates by $17.8 million.
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.
Explaining the success of a business like Chipotle is easy, said Jim Cramer on Friday. It's not about gross profit margins, cost-cutting or acquisitions. It's a lot simpler.
"It just sold a ton more burritos than you thought it could," wrote Jim Cramer in his premium-service Real Money column. "Chipotle is more than just natural and organic, even as its ethos is clearly food-chain oriented. It is all about promoting the best people and getting them to be able to move traffic along throughout the day in an orderly way so that more customers can be served at peak hours."
UBS analysts Keith Siegner and Dennis Geiger remained slightly less optimistic with a "neutral" rating and $530 price target, noting that it has a great topline but its outlook is not so simple.
"Well above street-high same store traffic/mix of 9.3% was a powerful statement of how on-trend food and service can overcome challenging macro factors. CMG is clearly at that sweet spot where even reduced advertising didn't impact momentum," Siegner and Gieger wrote in the report.
"With a 23x 2014E EBITDA multiple (based on new peak share prices aftermarket) leaving little margin for error against now even higher expectations, we continue to believe a Neutral best reflects the overall risk/reward."
Oppenheimer analyst Brian Bittner reiterated an "outperform" rating and price target of $625, and believes the company will achieve 2014 EPS of $13.02 and 2015 EPS of $16.64.
"CMG's 9% comp in the current retail environment highlights the attractive bottom-up story we support. With exciting new sales catalysts lurking and a margin-enhancing price increase in the pipeline, we're bullish on accelerating fundamentals and '15 EPS upside potential," wrote Bittner in the report.
Credit Suisse kept its "outperform" rating and raised its price target to $640 from $620.
"Even without 4Q headwinds, traffic numbers would be impressive: A 9.3% comp beat even the high end of estimates, and supports our thesis that favorable demographics, a strong value proposition, and a growing willingness to proactively drive traffic can continue to drive comps ahead of expectations," wrote analyst Karen Holthouse in the report.
However, Credit Suisse has lowered its 2014 EPS estimates to $12.27 from $13.08 and 2015 EPS estimates to $15.68 from $15.99 with stronger top-line growth offset by higher commodity inflation.
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."
- You can view the full analysis from the report here: CMG Ratings Report