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Chipotle Mexican Grill was back even before its big winnings were beaten this Tuesday, but its stock was on such a strong start that it could well enter the realm of expensive menus.
The fast-food and casual food company, battered for years after a series of food-borne illness problems, grew by more than 71% in 2019. It set a new absolute record for prolonged trading on Tuesday night, at Above $ 760, the latest move is a huge rebound for a company that saw its shares fall to $ 250 in 2018.
For Stephen Anderson, Senior VP and equity research badyst at Maxim Group, which focuses on the foodservice and consumer sectors, the company's operational performance is good news, but we should be cautious about earnings gains 'action.
The main driver was the growth of digital sales, a source of fast-growing sales for all restaurants.
"What really boosts revenue growth is the strong acceleration of digital, online and mobile platforms," Anderson said.
Digital sales growth nearly doubled, with growth of 99.1% and 18.2% of sales. This compares with 13% of sales at the end of 2018. It was also the first full quarter to see how the Chipotle loyalty program, launched in March, would help propel a broader digital strategy.
According to Anderson, CEO Brian Niccol, who has been with Taco Bell and CMG since February 2018, has been successful in creating a digital culture in the company. "We believe that digital sales bring many benefits, not just increased volumes, but also help to improve margins, reduce food and labor costs, and they are key benefits. "said Anderson.
A cover on the shares could come next
Quarterly figures were good overall.
Chipotle earned $ 3.99 per share, exceeding the $ 3.76 expected by badysts surveyed by Refinitiv. Net sales rose 13.2% to $ 1.43 billion, exceeding expectations by $ 1.41 billion. Wall Street expected. Same store sales growth was up 10% from 8.33% forecast. Transactions in stores opened at least one year ago increased by almost 7%. The average check jumped 3.5%, helped by price increases on menus.
Chipotle has once again raised its year-over-year growth outlook. It expects that sales in restaurants open for at least a year will increase at a rate above 10%, up from a previous estimate of average to high single-digit growth.
According to Anderson, same-store sales increased by 10 per cent over its 9 per cent forecast, but this is not consistent with the level of comparable sales that CMG has been able to achieve in the days leading up to the disease outbreaks. its places of restoration. society and scared the guests. And this remains the main reason to worry about the valuation of the company.
"Our question is a valuation story, comparable store sales in comparable stores are impressive at 10%, but in 2012, 2013 and 2014, they were already mid-teens, and investors should be aware of this." Mr. Anderson. . He added, "Are we saying that this is a bad company? In any case … Our question is whether new investors are willing to accept very high valuations?"
The Maxim group badyst said that the cost of food, especially essential ingredients such as avocados and tomatoes, was another area of concern for the "very immediate future". The price of avocados has almost doubled since the beginning of the year and represents "a high figure of the entire Chipotle food basket," he said.
Chipotle reported in its results that rising costs of the lawyer resulted in a 1.1% increase in the cost of food, beverages and packaging during the quarter.
"Investors should also be aware of this before considering an investment," Anderson said.
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