Current Situation of Chipotle's Shares
Chipotle Mexican Grill's (NYSE: CMG) stock soared by 25% in 2024, mirroring the S&P 500's performance. Meanwhile, Starbucks' stock (NASDAQ: SBUX) climbed roughly 20%. But what's propelling CMG's growth?
Firstly, Chipotle's FY 2024 revenue skyrocketed by 15% to an impressive $11.3 billion. This was fueled by a 7.4% surge in comparable-restaurant sales, thanks to a 5.3% increase in customer transactions and a 2.1% rise in average check size. Digital sales remained robust, contributing 35% to the core business. Operating profit saw a significant 23% increase, driven by margin expansion, with the operating margin reaching 16.9%.
The company's robust performance is evident in its store numbers. In FY 2024, CMG opened 304 new locations, with 257 featuring Chipotlanes - drive-thru lanes dedicated to digital orders. By year-end, Chipotle had expanded to over 3,700 restaurants. This strategic expansion, in tandem with menu innovation and price increases, has helped CMG weather volatility, like the 2025's sales dip due to weather disruptions.
Plans are underway for 315-345 new locations in 2025, with over 80% including Chipotlanes. However, the competition may intensify, particularly in the drive-thru space, with giants like McDonald's (NYSE: MCD) and Domino's in the picture.
While Chipotle's stock has shown volatility with returns of 26% in 2021, -21% in 2022, 65% in 2023, and 32% in 2024, a diversified portfolio like the High Quality Portfolio can offer lower risk and has outperformed the S&P 500 with returns exceeding 91% since its inception.
Looking ahead, we project Chipotle's revenues to hit $12.8 billion in FY 2025, leading to an EPS of $1.32. This would justify our revised valuation estimate for CMG of $60 per share, given a 45.7x price-to-earnings multiple for FY 2025.
In conclusion, Chipotle's strong revenue growth, operational efficiency, and strategic investments have positioned it for continued success. Its expansion into smaller markets and overseas territories, like the U.K., France, Germany, and Kuwait, holds significant potential.
CMG's impressive revenue growth in 2024, reaching $11.3 billion, can be attributed to the performance of Chipotle Mexican Grill, a company whose stock trades on the NYSE under the ticker symbol CMG. The surge in comparable-restaurant sales, driven by an increase in customer transactions and average check size, significantly contributed to CMG's revenue revenue growth.
