|
Related Topics
|
Category: Stock Market and Chipotle
Date: 4 September 2019 Stock Price: $827.87 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of Chipotle, the mexican grill food franchise group.
|
About Chipotle
Chipotle Mexican Grill, Inc. (NYSE: CMG) is cultivating a better world by serving responsibly sourced, classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. Chipotle had approximately 2,500 restaurants as of June 30, 2019, in the United States, Canada, the United Kingdom, France and Germany and is the only restaurant company of its size that owns and operates all its restaurants. With more than 80,000 employees passionate about providing a great guest experience, Chipotle is a longtime leader and innovator in the food industry. Chipotle is committed to making its food more accessible to everyone while continuing to be a brand with a demonstrated purpose as it leads the way in digital, technology and sustainable business practices. Steve Ells, founder and executive chairman, first opened Chipotle with a single restaurant in Denver, Colorado in 1993.
Financial overview of Chipotle's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $1.434 billion (up from $1.266 billion for the same quarter of the previous year)
- Operating income: $120 million (up from $67.957 million for the same quarter of the previous year)
- Net income: $98.12 million ($46.884 million for the same quarter of the previous year)
- Diluted earnings per share: $3.22 (up from $1.68 for the same quarter of the previous year)
- Weighted average shares outstanding-diluted: 28.3 million (up from 27.935 million for the same quarter of the previous year)
- Cash and equivalents: $299.9 million
- Cash and cash equivalents per share: $10.59
- Cash and cash equivalents makes up 6.4% of the group's total assets
- Cash and cash equivalents makes up 1.28% of the group's current market capital
- Accounts and notes receivable: $49.36 million
- Accounts and notes receivable makes up 1.06% of the group's total assets
- Stockholders equity: $1.538 billion
- Stockholders equity per share: $54.36
- Cash generated from operations: $179.16 million
- Cash generated from operations per share: $16.33
Chipotle's management commentary on the results and earnings guidance
NEWPORT BEACH, Calf., July 23, 2019 /PRNEWSWIRE/ -- Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its second quarter ended June 30, 2019.
Second quarter highlights, year over year:
"We're pleased with our financial performance, which marks the sixth consecutive quarter of accelerating comps and reflects continued progress on our key strategic initiatives," said Brian Niccol, Chief Executive Officer. "These strong results were delivered despite a tougher year over year comparison and benefited from better restaurant operations, more effective marketing, and leveraging our digital make line to grow sales and expand access."
Outlook
For 2019, management is anticipating the following:
Second quarter highlights, year over year:
- Revenue increased 13.2% to $1.4 billion
- Comparable restaurant sales increased 10.0%, net of 40 bps from loyalty deferral, and included nearly 7% of comparable restaurant transaction growth
- Digital sales grew 99.1% and accounted for 18.2% of sales for the quarter
- Restaurant level operating margin was 20.9%, an increase from 19.7%
- Diluted earnings per share was $3.22, net of a $0.77 after-tax impact from expenses related to restaurant asset impairment, corporate restructuring, and certain other costs, a 91.7% increase from $1.68. Adjusted diluted earnings per share excluding these charges was $3.99, a 39.0% increase from $2.87.1
- Opened 20 new restaurants and closed 1
"We're pleased with our financial performance, which marks the sixth consecutive quarter of accelerating comps and reflects continued progress on our key strategic initiatives," said Brian Niccol, Chief Executive Officer. "These strong results were delivered despite a tougher year over year comparison and benefited from better restaurant operations, more effective marketing, and leveraging our digital make line to grow sales and expand access."
Outlook
For 2019, management is anticipating the following:
- High single digit comparable restaurant sales growth, up from the prior mid to high single digit range expectation
- 140 to 155 new restaurant openings
- An estimated underlying effective full year tax rate in the range of 26% and 29%
Chipotle (NYSE: CMG) stock price history
The image below shows the stock price history of Chipotle Mexican Grill (NYSE: CMG) over the last 5 years. And its been a seesaw affair for the group's stock, with it being hit with significant declines since late 2015 and hitting its lows at the start of 2018 with the stock trading around $271 in early 2018. Since them the group's stock has surged all the way to over $827 a stock. Since its lows in 2018 to its current price the stock price has increased by 205% in less than two years. That just shows how strong the recent upsurge in the price of Chipotle Mexican Grill stock has been. The question is whether the group's stock offers value at its current price considering its strong run in the last two years? Is there value in the stock based on their latest earnings reports?
Chipotle (NYSE: CMG) latest stock valuation
So based on their latest earnings report what do value Chipotle Mexican Grill shares at? And is there value in the stock considering the strong run the stock price had over the last two years? Based on the earnings report and guidance provided our valuation models have a target price for Chipotle at $410 a stock. We therefore believe the stock's strong run so far in 2019 has been overdone and we would not recommend long term fundamental investors invest in the stock at its current price. We will do a valuation of the group's stock again once they release their 3rq quarter 2019 results in October of this year.