Chipotle (CMG) posted Q4 revenue of $1.07B which was on the lower end of expectations, $1.07B - $1.09B. Chipotle's Q4 eps was $3.84, in-line with consensus, $3.79 - $3.87. Comparable store sales came in up 16.9% was in-line with consensus of 14% - 17%. Chipotle took a 6.3% price increase in the summer of 2014. All of Chipotle's store metrics look good, comp store sales up +16.1%, average revenue per store up +14%, throughput increasing.
The guidance of comp store sales up low to mid single digits was the big disappointment. Consensus was looking for comp store sales guidance around 8%. Management did mention a possible targeted beef product price increase in the second half which could goose comp store sales by 1.5%, but management will make the final decision on that at the end of Q2.
I actually like what management is doing here. They are guiding conservatively. Nobody ever got fired for setting the bar low. The analysts on the call got their feathers ruffled, because don't like to be told that management does not make menu price decisions based on the stock price. These guys have proven themselves to be top notch operators. Why would you question them now? The stock is a bit pricey at 38x forward earnings, but it is a quality growth stock, so it won't ever be cheap.
Michael Grove, CFA