With Its Latest Earnings Results, Chipotle Sizzles

In the company's latest earnings release, Chipotle demonstrated yet again that it is one of the best restaurant stocks and remains an appealing long-term growth investment.

Feb 7, 2014 at 4:00PM

Last week, Chipotle Mexican Grill (NYSE:CMG) announced fourth-quarter and full-year results for fiscal 2013. The above-average results indicate that Chipotle continues to experience solid momentum as a result of its powerful brand recognition among consumers.


On a year-over-year basis, EPS in the fourth quarter grew 29.7% and revenue grew 20.7%. For the full year, Chipotle's results were also impressive, as the company managed to increase diluted EPS 19.7% while revenue advanced 17.7%. 

In after-hours trading, shares of Chipotle achieved record highs. Plus, the stock was up a staggering 83% in 2013 alone.

The growth drivers
Probably the most impressive piece of news to come out of Chipotle's latest earnings release was also what has been driving the company's robust growth as of late. In the fourth quarter, sales of comparable restaurants rose an impressive 9.3%, which was way above the average analyst estimate of 6.5%.

In the company's earnings release, management stated, "Comparable restaurant sales growth was primarily driven by the impact of increased traffic."

However, despite the company's already sizable restaurant count, which currently stands at 1,595, Chipotle continues to open new locations at a furious pace. In the fourth quarter alone, the company opened 56 new restaurants. For full year 2013, Chipotle opened 186 new locations, which represents year-over-year growth of 13.1%.

Additionally, management is targeting 180-195 new restaurant openings in 2014, meaning the company will most likely match its 2013 new store opening count and possibly even exceed it. For 2014, management is also targeting low- to mid-single digit comparable-store sales. However, this number does not reflect any menu increases, which I would not be surprised to see in the coming year.

Also major drivers of future growth are the company's two new restaurant brands, ShopHouse and Pizzeria Locale, which are the company's take on Southeast Asian food and pizza, respectively. Although management continues to warn investors about viewing these brands as meaningful drivers of growth in the short term, in the long term they represent significant opportunities for Chipotle to capture entirely new audiences.

Still a growth leader
If Chipotle's latest earnings results reveal one thing, it's that the company is still a growth leader in the restaurant industry. The company's growth compared to peers is impressive. The following is Chipotle's expected growth for 2014 compared to that of smaller competitor Panera Bread (NASDAQ:PNRA) and larger competitor Yum! Brands (NYSE:YUM)



Panera Bread

Yum! Brands

Revenue Growth 2014




EPS Growth 2014





Yum! Brands Main Facebook Page

I chose to compare Chipotle to Panera Bread and Yum! Brands because to me these two companies represent what Chipotle used to be and what it strives to be, respectively. Whereas Chipotle used to have only one restaurant brand like Panera Bread, it now has three distinct brands, even though two of them are still in their infancy. In my opinion, Chipotle is fast on its way to becoming a global restaurant leader like Yum! Brands, albeit one with higher-quality products and services.

Either way, Chipotle is expected to experience the most aggressive revenue growth out of all listed peers in 2014 by a significant margin. In terms of EPS, Chipotle's growth is even better, although it is projected to lag slightly behind Yum! Brands'. However, it is worth noting that Yum! Brands is coming off a particularly bad fiscal 2013 in which it is projected to post revenue and EPS declines.

Not too late

Despite Chipotle's fantastic growth story, which started approximately 20 years ago, and the stock's massive run up last year, the company remains one of the best investments in the restaurant industry.

With solid growth still left in the Chipotle Mexican Grill brand and with two new restaurant brands that are only just beginning to emerge, Chipotle should continue to spice up portfolios in the long term. Accordingly, Chipotle will continue to remain one of my largest holdings in 2014. 

Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.


Philip Saglimbeni owns shares of Chipotle Mexican Grill. The Motley Fool recommends Chipotle Mexican Grill and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information