Chipotle Ad Boost Serves up 15% Profit Gain

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Oct. 18 (Bloomberg) -- Bloomberg’s Alix Steel recaps third-quarter results form Chipotle Mexican Grill as sales, profits and revenue all climbed higher. She speaks on Bloomberg Television’s “In The Loop.”

Third-quarter profit rose.

Joining us with more is bloomberg correspondent alix steel and also an analyst from wedbush securities who covers the stock, raised it to outperform an increased price target.

Alix, i want to start with you.

What were the standout in what looked like a low of quarter?

Are we are leading more burritos?

Is the chain of events.

They spent more in market and advertising which drew more into their stores, profit, and led to the biggest surprise of all, actually a six point two percent increase in quarterly same-store sales growth.

Those analysts were anticipating anywhere between four percent and five percent.

It also raised guidance for same-store sales.

The other bright spot was really about store openings.

It opened 37 new restaurants last quarter, less the first one in germany.

Europe could actually be a pretty strong source of expansion for the company going forward.

All of this helped chipotle to maintain its title as a growth restaurant stock, which is seen as an oxymoron in the restaurant world.

Wedbush securities got on the bandwagon and jumped its rice target up to $500 from 400 and $30. what about earnings?

It did miss -- but that is because it costs more to reduce food.

It did not raise rices in three years.

And it will roll out some gm oh- free ingredients.

What you can see it reflected in margins.

They have been cooling down and they were lower again last quarter.

However, chipotle still has the best margins in the restaurant industry ever, quite frankly, but most analysts i spoke to did not think they would get much better from here.

The biggest question for investors now, is it worth the money?

It trades at more than one half times the price to earnings multiple, so when do the numbers become so big that it cannot keep up the growth question mark that is a concern some analysts are already starting to talk about.

Brian elliott over at raymond james thinks the market is rising in five percent-eight percent, --comp longer-term but he thinks it would be half.

Nick, you raise your price target to $510.

This text has been automatically generated. It may not be 100% accurate.


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