4. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holders: 39
Chipotle Mexican Grill, Inc. (NYSE:CMG) is a Newport Beach, California-based fast-casual restaurant chain. The restaurant is known for its healthy offerings.
Following its Q3 2022 results, Joshua Long at Stephens reiterated an Overweight rating on Chipotle Mexican Grill, Inc. (NYSE:CMG) stock with a target price of $1,760. The analyst highlighted the company’s better-than-expected quarterly results as it outperformed adjusted EPS estimates. Revenue increased by 12.8% to $2.2 billion, while the adjusted EPS of $9.51 was 32 cents higher than the analysts’ estimate of $9.19. Following the results, the analyst also increased his Q4 2022 adjusted EPS forecast as Chipotle Mexican Grill, Inc. (NYSE:CMG) shared that it anticipates comparable store sales to grow in the mid-single to the high-single-digit range in the next quarter.
Here’s what Pershing Square Holdings said about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2022 investor letter:
“Chipotle Mexican Grill, Inc. (NYSE:CMG) continued its impressive performance in 2022 driven by the ongoing recovery of in-restaurant sales, price increases to cover cost inflation, and successful menu innovation including pollo asado. During the second quarter, Chipotle continued to lead the restaurant industry in growth for both same-store sales (“SSS”) and new restaurants, with SSS growing 10% year-over-year or 30% on a three-year cumulative basis. On-premise sales grew 36% as consumers resumed pre-pandemic routines, while digital sales declined only 3%, continuing their persistence despite the growth of conventional sales. Chipotle remains on track to grow its store base by approximately 8% this year with a longer-term annual store growth aspiration of nearly 10% once current headwinds around construction, permitting, and supplies ease.
We believe Chipotle is one of the best-positioned consumer companies for the current inflationary world. Given significant inflation in food and labor costs, management has planned a menu price increase of approximately 4% for August following a similarly-sized price increase in March. The company has tremendous pricing power due to the superb quality of its food which is priced at a discount to many competitors with inferior offerings, marketing focused on food quality and freshness rather than cost, and a customer base that over-indexes to higher-income consumers, some of whom are trading down from pricier alternatives.
Chipotle’s economic model remains firmly intact, with restaurant-level margins in excess of 25% in the second quarter, up 0.8% year-over-year, and a consistent level of profitability expected for the current quarter. The company is debt-free and generates nearly all its sales in the U.S., insulating its earnings from the foreign currency headwinds facing many other large consumer companies. …” (Click here to read the full text)
Chipotle Mexican Grill, Inc. (NYSE:CMG) was held by 39 hedge funds as of Q2 2022.
