The burrito chain reported that net income surged an impressive 76.9%, to $34.5 million, or $1.08 per share. Revenue increased 13.8% to $387.6 million, and same-store sales increased 2.7%. Even those relatively modest gains are no small feat in the current economy. In more happy news, restaurant-level operating margin increased 410 basis points, to 25.5%. By all appearances, the company is really rockin'.
Chipotle even beat analysts' expectations, although many Foolish investors would take such tidings with a grain of salt (or a sprinkling of cilantro).
I think Chipotle's a fantastic company. Its "Food With Integrity" mission recalls the type of passion that Whole Foods Market
In my opinion, the restaurant's advocacy of sustainably raised ingredients is a visionary stand that will only grow more important to consumers over time. At the very least, that type of passion definitely differentiates Chipotle from cheaper fast-food rivals such as former parent McDonald's
It's hard to tell why investors reacted so negatively to Chipotle's savory earnings. While I think Chipotle is a high-quality stock, I'll admit that its share price has gotten a bit overstuffed. Last quarter it was trading for a bloated 30 times earnings, and even with its recent pullback, it still commands a P/E of 28 times. McDonald's has been doing very well operationally, and shares fetch only 16 times earnings. And unlike Chipotle, Mickey D's pays its shareholders a juicy dividend as well.
I don't think investors should throw Chipotle shares away; it strikes me as a good long-term pick for a growth-geared portfolio. In the near term, though, I think it's too expensive to gobble up any shares now, and current shareholders may endure a short-term roller-coaster ride, given its high price. I may love the company, but I'm not thrilled about its price tag.
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