CHIPOTLE MEXICAN GRILL $531.66 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 30.9 million; Market cap: $16.7 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.
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In the three months ended September 30, 2013, Chipotle’s sales gained 18.0%, to $826.9 million from $700.5 million a year earlier. The company’s restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 4.3%. Chipotle also opened 37 new outlets, and now has a total of 1,539. In 2014, it aims to open 180 to 195 more.
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Earnings rose 15.3%, to $83.4 million from $72.3 million. Per-share earnings increased 18.4%, to $2.70 from $2.28, on fewer shares outstanding.
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Chipotle’s profits would have been even higher if not for increased food and ingredient prices. These made up 33.6% of its sales in the latest quarter, up from 32.6% a year ago. Prices rose particularly sharply for chicken, dairy products and salsa ingredients.
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The company operates in the fickle and extremely competitive U.S. restaurant market. The shares are up 112% over the past year and are hitting all-time highs. They now trade at nearly 43 times Chipotle’s forecast 2014 earnings of $12.40 a share. That’s a high ratio that leaves the stock vulnerable if the company runs into any short-term problems.

Still, Chipotle is a well-established chain with a growing following, especially among healthconscious, environmentally aware consumers.
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Chipotle is still a hold.
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