Here’s Why Chipotle Surged After Yesterday’s Earnings But Closed In The Red

Discussion in 'Stock Market Forum' started by PaulSchinider, Apr 18, 2014.

  1. PaulSchinider

    PaulSchinider Well-Known Member

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    Chipotle Mexican Grill, Inc. (CMG) served up its first quarter (1Q) earnings results for fiscal 2014 (FY14) yesterday, just before the markets opened. The fast-casual chain of restaurants delivered somewhat mixed results, beating expectations for revenues and missing consensus estimates for earnings.

    For the quarter that ended March 31, Chipotle’s net income rose 8% year-to-year (YoY) to $83.1 million. Per-share earnings (EPS) for the Denver, Colorado-based chain were up 7% in the same period to reach $2.64, missing consensus estimates of $2.86 a share. Revenues for the quarter increased 24% to reach $904 million, ahead of the Street’s estimates of $874 million. Soaring costs of several food commodities were a drag on profitability, and the company announced that it was hiking prices for the first time in three years. Despite the mixed results, the management was upbeat about the positive sales growth during the quarter. Comparable same-store sales growth for the company came in at a very favorable 13.4% YoY, and was higher than the 9% growth that Chipotle recorded in 4QFY13.


    "We are delighted that more and more people are choosing to visit our restaurants every day, allowing us to deliver double-digit comps during the quarter," said Chipotle co-CEO and founder Steve Ells.

     
  2. Annabell

    Annabell Well-Known Member

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    That's interesting, and I'm wondering how this is going to affect the way people view them from now on. I mean, if they're increasing their costs, I'm wondering if it is going to drive their customers away.
     
  3. wanderingwildman

    wanderingwildman Well-Known Member

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    I would anticipate that increased costs will drive their customers away a bit. Chipotle has really high quality. However, it is hard to convince people to buy a burrito for $8 or so when other Mexican places are doing it for two to three dollars. These places often have larger portions also.
     
  4. PaulSchinider

    PaulSchinider Well-Known Member

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    Chipotle is giving a bunch of quality mexican food they have charge for it, they give best quality that's why they charge it simple but in future if they increase more then people will react i think...
     
  5. PvtParts

    PvtParts Guest

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    It's surprising though that McDonald's stock is valued at $99.56, while Chipotle's is $511.84!
     
  6. wanderingwildman

    wanderingwildman Well-Known Member

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    That is a great comparison PVt Parts. I wonder why the distance is so drastic. You would only have to pay about 3-4USD more for a meal from Chipotle.
     
  7. PvtParts

    PvtParts Guest

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    I tried researching a bit. In hindsight, the answer seems pretty obvious. It's growth! Or the potential for growth. Investors will have more earnings in investing in Chipotle (if Chipotle does indeed let's say double in five years) than if they invested in McDonald's (which looks like it can't possibly grow any larger in that period of time).

    Ha! I can't believe I was ever surprised in the first place!
     
  8. JR Ewing

    JR Ewing Super Moderator Staff Member

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    The price per share difference between McD's and CMG is misleading if just taken at face value.

    McD's has a market cap of nearly $100 billion, CMG less than $15 bil.

    MCD has nearly a billion shares outstanding, CMG roughly 31 mil. So CMG's EPS that's nearly twice that of MCD isn't a really a factor in comparing the two IMO.

    MCD is a much larger company that earns far more.

    CMG earnings and rev GROWTH roughly 4-5 times that of MCD though.

    MCD is cheaper in terms of P/E, P/B, & P/S.

    ttp://quotes.morningstar.com/stock/cmg/s?t=CMG


    http://quotes.morningstar.com/stock/mcd/s?t=MCD
     
  9. JR Ewing

    JR Ewing Super Moderator Staff Member

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    MCD has lots of valuable real estate as well. I don't personally like their food, but many people obviously do.
     
  10. wanderingwildman

    wanderingwildman Well-Known Member

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    That is true that Mcdonald's can't really grow that much more. I couldn't imagine having that as a problem with my business. Those people are very fortunate to have those kinds of problems:)
     
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