After the market closed on Feb. 4, Chipotle Mexican Grill Inc. CMG announced its earnings for the fourth quarter and full year of 2019. Shares were up to an all-time high in after-hours trading following the company’s earnings beat.
For the quarter, the burrito chain surpassed analyst expectations with revenue of $1.4 billion and adjusted earnings per share of $2.86. Analysts expected $1.4 billion in revenue and adjusted earnings per share of $2.74.
Other quarterly metrics included diluted earnings per share of $2.55 (up 121.7% from the prior-year quarter) and $72.4 million in net income compared to $32 million in the prior-year quarter. Same-store sales increased 13.4%, while digital transactions grew 78.3% and now account for 19.6% of all sales.
For the full year, revenue came in at $5.6 billion (up 14.8% year over year), diluted earnings per share were $12.38 (up 96.2%) and net income was $350.2 million (up 98.3%).
Contributors to growth
Over the past 12 months, Chipotle shares have gained 64.68% to a price of $884.82 as of market close on Feb. 4.
For both the quarter and full year, Chipotle saw strong growth in its delivery and in-store pickup options. There was also a 5.4% increase in the average check, meaning that customers are buying more when they order (this, too, can be partially attributed to delivery orders).
The company opened a record number of 76 net new locations during the quarter and 131 net new locations during the full year. This includes 66 “Chipotlanes,” which are drive-thru locations in which customers order online and pick up at the Chipotlane.
The carne asada menu option continued to be popular, prompting Chipotle to extend its availability for another quarter despite the increasing cost of the ingredients.
Chipotle has also continued its strong share repurchase program, repurchasing an average of 3.3% of shares outstanding over the past three years, which has contributed to the growth of the stock price.
Looking forward
For 2020, Chipotle anticipates opening between 150 and 165 new restaurants, more than half including a drive-thru Chipotlane. Management expects same-store sales growth in the mid-single digits and a full-year effective tax rate of between 26% and 29%. The effective tax rate was only 23.6% for full-year 2019, which indicates that the company is likely to increase its share repurchases and executive compensation plans in the year ahead (both strong signs that the company expects growth).
Disclosure: Author owns no shares in any of the stocks mentioned.
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