Chipotle (CMG) – Best Restaurant Growth Stock

October 21, 2011
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chipotle

 

  • Chipotle beat the earnings consensus by $0.05 posting $1.90 vs. consensus of $1.85
  • Chipotle (CMG) is worth keeping an eye on because it is the fastest growth and highest valuation restaurant stock in the world.
  • Same store sales were 11.3% which is a tremendous result. Chipotle has been adept at continuing to move the lines in the stores quicker.
  • Chipotle likes its restaurant base so much it owns all of them ā€“ which is a very different model relative to McDonaldā€™s and Yum Brands. Owning the restaurants requires more capital but enables Chipotle to capture all the profit from each unit and leverage corporate expenses easily when sales are robust.
  • Chipotle is accelerating their new restaurant openings. Growth still has a long runway in the US and has only begun in Europe and around the world
  • Next year earnings will likely be between $10-$12 per share
  • 2013 earnings will like be $14-$15 per share
  • While the valuation of the stock is very high, investors really believe in the growth of the CMG restaurant base so that every dip gets bought quickly.
  • The stock price is $330 but appears sustainable with the potential to move higher as overseas results demonstrate more growth avenues.
  • The Chipotle market capitalization is now above $10B.
  • The short interest is 10.5% of the float
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