CHIPOTLE MEXICAN GRILL $730.01 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.1 million; Market cap: $22.8 billion; No dividends paid) is a Denver- based Mexican restaurant chain. It charges slightly higher prices than fast food companies, but it offers better quality food, including naturally raised meat, and superior decor and service.
In the three months ended June 30, 2015, Chipotle’s sales jumped 14.1%, to $1.20 billion from $1.05 billion a year earlier. Its restaurants attracted more customers during the quarter, which increased its same-restaurant sales by 4.3%.
Chipotle opened 48 new outlets, bringing its total to 1,878. It aims to add a total of 100 locations this year. Earnings gained 27.1%, to $140.2 million, or $4.51 a share, from $110.3 million, or $3.55. That’s partly because it raised the prices of some menu items last year, offsetting higher beef and packaging costs.
The company is a well-established chain with a growing following, especially among healthconscious, environmentally aware consumers.
Still, Chipotle operates in the fickle and extremely competitive U.S. restaurant market. It also trades at over 42 times its forecast 2015 earnings of $17.16 a share. That’s a high ratio that leaves the stock vulnerable if Chipotle runs into any short-term problems.
Chipotle is still a hold.
