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Category: Stock Market and Chipotle (CMG)
Date: 22 October 2020 Stock Price of Chipotle : $1366.66 We take a look at the 3rd quarter earnings report of their 2020 fiscal year of Chipotle, the mexican grill food franchise group with over 2500 restaurants across the globe. Revenue for the 3rd quarter 2020 came in at $1.6 billion, up 14% on the same quarter of the previous year and Chipotle reported net income of $80.24 million for the quarter.
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I want to thank and acknowledge the incredible Chipotle team members who remain focused on great execution and on advancing our purpose of Cultivating a Better World as demonstrated by our outstanding third quarter results -Brian Niccol, Chairman and CEO, Chipotle."
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.
Chipotle for real chicken bowl
Overview of Chipotle's 3rd quarter 2020 earnings report
The data below refers to the numbers of the latest quarter (unless specified otherwise)
- Revenue: $1.601 billion (up from $1.403 billion for the same quarter of the previous year)
- Revenue increased by 14.1% over the last 12 months
- Total operating expenses: $1.494 billion (up from $1.288 billion for the same quarter of the previous year)
- Total operating expenses increased by 15.9% over the last 12 months
- Some margin pressure on Chipotle as their revenues grew at a slower rate than their operating expenses
- Net income: $80.244 million (down from $98.582 million for the same quarter of the previous year)
- Diluted earnings per share: $2.82 (down from $3.47 for the same quarter of the previous year)
- Weighted average shares outstanding-diluted: 28.454 million (up from 28.388 million for the same quarter of the previous year)
- Cash and equivalents: $662.401 million
- Cash and cash equivalents per share: $23.27
- Cash and cash equivalents makes up 11.7% of the Chipotle's total assets
- Cash and cash equivalents makes up 1.7% of Chipotle's current market capital
- Accounts and notes receivable: $69.366 million
- Accounts and notes receivable makes up 1.3% of the group's total assets
- Stockholders equity in Chipotle: $1.805 billion
- Stockholders equity per share in Chipotle: $63.43
- Chipotle is trading at 21.5 times its stockholders equity per share, which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For perspective the S&P 500 is trading at a price to book value of 3.71. Read more about the S&P500 here
- Cash generated from operations for first 3 quarters of 2020: $548.723 million
- Cash generated from operations per share for first 3 quarters of 2020: $19.28
Chipotle's management commentary on their 3rd quarter 2020 earnings
NEWPORT BEACH, Calf., Oct. 21, 2020 /PRNEWSWIRE/ -- Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its third quarter ended September 30, 2020.
Third quarter highlights, which incorporate the impact of COVID-19, year over year:
"I want to thank and acknowledge the incredible Chipotle team members who remain focused on great execution and on advancing our purpose of Cultivating a Better World as demonstrated by our outstanding third quarter results," said Brian Niccol, Chairman and CEO, Chipotle. "I have never been more confident that Chipotle is a powerful brand committed to fostering a culture that values and champions our diversity, while leveraging the individual talents of all team members. As a result of a strong brand, committed employees, and broad financial strength, we remain excited about Chipotle's powerful economic model and our long-term potential."
Third quarter highlights, which incorporate the impact of COVID-19, year over year:
- Revenue increased 14.1% to $1.6 billion
- Comparable restaurant sales increased 8.3%
- Digital sales grew 202.5% and accounted for 48.8% of sales for the quarter
- Restaurant level operating margin was 19.5%, a decrease of 1.3%
- Diluted earnings per share was $2.82, net of a $0.94 after-tax impact from expenses related to certain legal proceedings, restaurant asset impairment and closure costs, as well as corporate restructuring and other adjustments, an 18.7% decrease from $3.47. Adjusted diluted earnings per share excluding these charges was $3.76, a 1.6% decrease from $3.821
- Opened 44 new restaurants and closed three restaurants during the quarter; and about 10 restaurants remain temporarily closed because of COVID-19, mainly inside malls and shopping centers
"I want to thank and acknowledge the incredible Chipotle team members who remain focused on great execution and on advancing our purpose of Cultivating a Better World as demonstrated by our outstanding third quarter results," said Brian Niccol, Chairman and CEO, Chipotle. "I have never been more confident that Chipotle is a powerful brand committed to fostering a culture that values and champions our diversity, while leveraging the individual talents of all team members. As a result of a strong brand, committed employees, and broad financial strength, we remain excited about Chipotle's powerful economic model and our long-term potential."
COVID-19 and Liquidity Update:
The health and well-being of our employees and guests continues to be our top priority. We are benefitting from investments made a few years ago including advanced air filtration systems, sanitizers throughout the restaurant, wellness protocols, and improved handwashing. In addition, we are closely following the recommendations of the CDC and local health departments and have implemented social distancing, wearing face masks, a tamper evident packaging seal for all digital orders, as well as creating the steward role to sanitize high-traffic areas. Collectively, these efforts have made the pivot to enhanced COVID-19 safety protocols much less complicated and give our employees and guests confidence that Chipotle remains steadfast in our commitment to keep them safe as we re-open restaurants for in-restaurant dining.
As of September 30, 2020, Chipotle continues to maintain a strong financial position with $1.1 billion in cash, investments and restricted cash, and no debt, along with a $600 million untapped credit facility with which to continue to navigate this crisis. This financial position improved sequentially from $934.6 million in cash, short-term investments and restricted cash, as of June 30, 2020. Our financial strength gives us the opportunity to make on-going strategic investments in our people, business, and communities, which we believe will benefit us for years to come. At the same time, our team remains focused on reducing non-essential controllable costs and judiciously spending on return generating projects to preserve liquidity.
Outlook
Given on-going uncertainty surrounding the future impact of COVID-19 on the broader US economy and any specific impact to our company, we are not providing fiscal 2020 guidance related to comparable restaurant sales growth, new restaurant openings, and effective full year tax rate.
The health and well-being of our employees and guests continues to be our top priority. We are benefitting from investments made a few years ago including advanced air filtration systems, sanitizers throughout the restaurant, wellness protocols, and improved handwashing. In addition, we are closely following the recommendations of the CDC and local health departments and have implemented social distancing, wearing face masks, a tamper evident packaging seal for all digital orders, as well as creating the steward role to sanitize high-traffic areas. Collectively, these efforts have made the pivot to enhanced COVID-19 safety protocols much less complicated and give our employees and guests confidence that Chipotle remains steadfast in our commitment to keep them safe as we re-open restaurants for in-restaurant dining.
As of September 30, 2020, Chipotle continues to maintain a strong financial position with $1.1 billion in cash, investments and restricted cash, and no debt, along with a $600 million untapped credit facility with which to continue to navigate this crisis. This financial position improved sequentially from $934.6 million in cash, short-term investments and restricted cash, as of June 30, 2020. Our financial strength gives us the opportunity to make on-going strategic investments in our people, business, and communities, which we believe will benefit us for years to come. At the same time, our team remains focused on reducing non-essential controllable costs and judiciously spending on return generating projects to preserve liquidity.
Outlook
Given on-going uncertainty surrounding the future impact of COVID-19 on the broader US economy and any specific impact to our company, we are not providing fiscal 2020 guidance related to comparable restaurant sales growth, new restaurant openings, and effective full year tax rate.
Chipotle (NYSE: CMG) stock price history chart over the last 5 years
The image below, obtained from Google, shows the stock price history of Chipotle Mexican Grill (NYSE: CMG) over the last 5 years. And it's been a very good time for Chipotle. 5 years ago the stock of Chipotle was trading at $620 a stock and its currently trading at $1366.66 That's a return of 120.4% provided to Chipotle the over the last 5 years
The stock of Chipotle is trading at a lot closer to its 52 week high of $1187 than it is to its 52 week low of $415 which to us is a clear indication that the short term sentiment and momentum of Chipotle's stock is very positive at this point in time.
The stock of Chipotle is trading at a lot closer to its 52 week high of $1187 than it is to its 52 week low of $415 which to us is a clear indication that the short term sentiment and momentum of Chipotle's stock is very positive at this point in time.
Chipotle (CMG) share price history over the last 5 years
Chipotle Mexican Grill (CMG) stock vs Mcdonald's (MCD) stock over the last 5 years
The image below shows the stock price performance of Chipotle Mexican Grill (MCG) and Mcdonalds (MCD) over the last 5 years. While both are active in the fast food and casual dining industry they do cater for totally different cuisine types. Over the 5 year period they provided the following returns to investors.
The stock of Chipotle has easily outperformed that of McDonalds over the last 5 years.
- Chipotle (CMG): 120.40%
- Mcdonalds (MCD): 33.6%
The stock of Chipotle has easily outperformed that of McDonalds over the last 5 years.
Chipotle Mexican Grill (CMG) stock vs Mcdonald's (MCD) stock over the last 5 years
Recent coverage of Chipotle (CMG)
The extract regarding Chipotle below is as obtained from CNBC.com
Chipotle Mexican Grill on Wednesday reported quarterly same-store sales growth of more than 8%, but a shift to delivery is boosting costs and resulting in fewer drink purchases, which dragged down its net income. Shares of the company fell 4% in after-hours trading.
Here’s what the company reported for the quarter ended Sept. 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Chipotle reported third-quarter net income of $80.2 million, or $2.82 per share, down from $98.6 million, or $3.47 per share, a year earlier. A higher volume of delivery and steak orders and more expensive beef increased costs, which were partially offset by menu price increases, less salsa usage and lower avocado prices.
Excluding $28.7 million in legal expenses and other items, the burrito chain earned $3.76 per share, topping the $3.47 per share expected by analysts surveyed by Refinitiv.
Read the full article here
Chipotle Mexican Grill on Wednesday reported quarterly same-store sales growth of more than 8%, but a shift to delivery is boosting costs and resulting in fewer drink purchases, which dragged down its net income. Shares of the company fell 4% in after-hours trading.
Here’s what the company reported for the quarter ended Sept. 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $3.76, adjusted, vs. $3.47 expected
- Revenue: $1.6 billion vs. $1.59 billion expected
Chipotle reported third-quarter net income of $80.2 million, or $2.82 per share, down from $98.6 million, or $3.47 per share, a year earlier. A higher volume of delivery and steak orders and more expensive beef increased costs, which were partially offset by menu price increases, less salsa usage and lower avocado prices.
Excluding $28.7 million in legal expenses and other items, the burrito chain earned $3.76 per share, topping the $3.47 per share expected by analysts surveyed by Refinitiv.
Read the full article here
Chipotle lifestyle bowl
Chipotle (NYSE: CMG) latest stock valuation
So based on Chipotle's 3rd quarter 2020 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 our valuation model provides a target price (full value price) for Chipotle at $449.50 a stock (up from our 2nd quarter 2020 earnings valuation of Chipotle). We therefore believe the stock of Chipotle is overvalued.
We usually recommend that investors look to enter a stock at least 10% below our target price which in this case s $449.50. A good entry point into the stock of Chipotle would therefore be at $404.30 or below. Since the stock of Chipotle is trading at well above our full value price we rate the stock of Chipotle as a sell
We usually recommend that investors look to enter a stock at least 10% below our target price which in this case s $449.50. A good entry point into the stock of Chipotle would therefore be at $404.30 or below. Since the stock of Chipotle is trading at well above our full value price we rate the stock of Chipotle as a sell
Chipotle (MCG) next earnings release
Chipotle is expected to release their 4th quarter 2020 earnings report towards the end of January 2021