Chipotle Mex Grill ($CMG) : Good Price, Good Company ?
My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on different company types (see below for details); time to try it on another fast food stock ?
Testing $Chipotle Mexican Grill(CMG)$ & see if it fits the bill.
Sidetrack: Below are stocks that I have covered. Interested ? Click to read.
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- McDonalds Inc
- United Parcel Service (UPS)
- Spotify Inc
- Apple Inc
- Meta Platform (Facebook)
- AMD Inc
- Snap Inc
- An American chain offast casua / restaurants
- Founded in 13 Jul 1993 (a barely 30 years old company)
- Founder was Steve Ells who was a graduate from The Culinary Institute of America and worked as a line chef prior to venturing out on his own
- In 1993, he opened the first Chipotle Mexican Grill in Denver, Colorado with a $85,000 loan from his father
- Needless to say it broke even in a relatively short time frame
- In 1995, the 2nd restaurant was opened, soon followed by a 3rd etc.. all within Colorado
- In 1998, the 1st inter-state restaurant (outside of Colorado) opened in Kansas City, Missouri.
- In the same year, $McDonald's(MCD)$ made an initial minority investment in Chipotle
- Flushed with cash, Chipotle expanded from 16 restaurants (1998) to over 500 by 2005.
- On 26 Jan 2006, Chipotle made its initial public offering (IPO) at $22 per share
- In Oct 2006, McDonald fully divested from Chipotle (its non-core business) as part of its internal strategy. Along with it $1.5 Billion from its $360 Million investment.
- As of 31 Dec 2021, Chipotle Mexican Grill has 44 international stores.
- Chipotle has a placed ranking in Forune's 500 companies
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did Chipotle fare ?
Current sotck price > 08 Feb 2022 stock price by +17.98% - Impressive !
Chipotle - Summary
- Revenue came in at $2.2 Billion vs $2.0 Billion (Q4 2021); thats a gain of +10% gain
- Net Income came in at $223.7 Million vs $133.5 Million (Q4 2021); thats a +67.57% gain
- Earnings per share (GAAP) was $8.02 vs $4.69 (Q4 2021); thats a +71% gain
- Earnings per share (non GAAP) was $8.29 vs $5.58 (Q4 2021); thats a +48.57% gain
Chipotle - Operating Statistics
- In the face of the covid pandemic adversity, could it be concluded that Chipotle as a whole fared rather well ?
- For starters, it managed to grow its number of restaurants Statesside from 2,966 (Q4 2021) to 3,187 (Q4 2022); thats a whooping 215 restaurants; given the persistent high labour crunch and costs
- And in terms of sales (average) every restaurant generates - it has also valued added from $2.64 (Q4 2021) to $2.82 (Q4 2022); thats a +6.82% gain
- Also is it justified to "discount" or "disregard" year 2021 sales as being out of the ordinary when that was the year where lockdowns, takeaways (permitted) and work from home was the norm ?
Chipotle - Other Highlights
- The operating margin gain of +24% is consistent with the Revenue and Net income announced
- Like the other US listed companies especially in the Tech and Financial services that are "labour" intensive as well, Chipotle has registered a +5% increased in operating expenses.
Chipotle's CEO on Q4 2022 Results
Our continued focus on recruiting and retaining the best people, delivering Chipotle's operational standards with delicious food prepared fresh daily uniquely positions Chipotle to successfully expand to 7,000 restaurants over the long term... Chipotle, CEO, Brian Niccol...
Is Chipotle Mex Grill A Good Price and Good Company ?
Chipotle - Market Cap from 2013 to 2022
- Looking at this company's market capitalisation makes you realized that this is a Food company that mean business and its good at what it does
- Ignoring year 2021 capitalisation record due to the year's abnormally in the US stock market (due to easy liquidity), Chipotle has capped off year 2022 with a credible results
- For 2023, it plans to open between 255 & 285 new locations. Including relocating 10 to 15 restaurants to add a drive-thru lane.
- Its looking to hire15,000 workers by spring ahead of its busiest time of the year.
- The increased in food item pricing (for the first time after many years) should help Chipotle to weather the overall price increases experienced by all businesses; as a result of 2022 & 203 interest hikes
- Do you think there is still upside potential to Chipotle in 2023 ?
- Do you think it offers a better value compared to McDonalds ? Its stock price is not exactly "cheap".
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