Why Chipotle Mexican Grill Stock Was Smoking

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.

What: Shares of Chipotle Mexican Grill (NYSE: CMG  ) were turning up the heat once again today, gaining as much as 15% after the burrito roller torched analyst estimates in its quarterly report.

So what: The fast-casual chain just keeps growing and growing. Top-line sales jumped 20.7% to $844.1 million on a red-hot 9.3% increase in same-store sales, driven largely by increased traffic. Meanwhile, analysts had expected sales of just $826.3 million in the quarter. Earnings per share of $2.53 matched analyst estimates as restaurant-level operating margins improved 100 basis points to 25.6%. CEO Steve Ells said, "We are very proud of our accomplishments during 2013," and noted that the company's "focus on our unique people and food cultures has created an impressive demand for a restaurant experience that is redefining fast food for the better."

Now what: For 2014, Chipotle plans to open nearly 200 new restaurants, and expects same-store sales in the low-to-mid single digits, excluding a potential price hike. With seemingly limitless growth ahead of it and a beloved brand and product, Chipotle looks poised to dominate over the next generation. As Ells explained, the company pioneered the fast-casual movement, and remains a beacon of better fast food 20 years after its inception. The stock may be pricey, but it's proved the naysayers wrong time and time again. With international expansion and the ShopHouse rollout now under way, I see little reason to expect Chipotle to falter.

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