Chipotle Reports Strong Q4 2024 but Faces Stock Pressure

Chipotle Mexican Grill shows impressive growth in Q4 2024, with revenue up 13.1%. However, despite solid results, its stock faced pressure, raising investor concerns about valuation and future growth, as analysts project EPS growth slowing down.

Date: 11-02-2025

AI Rating: 6

Earnings Performance and Valuation Impact
Chipotle Mexican Grill reported a significant increase in revenue, up 13.1% year-over-year to $2.8 billion in the fourth quarter of 2024. This revenue growth caps off another year of double-digit gains.

Despite the positive revenue results, the stock has shown pressure, potentially stemming from concerns about its valuation, as it currently trades at a price-to-earnings (P/E) ratio of 51.4, compared to the S&P 500 average of 25.5. Investors may be cautious, given that Chipotle's diluted earnings per share (EPS) has previously soared at an impressive compound annual growth rate of 35%. However, projected EPS growth of 18.4% for the next three years represents a significant slowdown.

Traffic and Same-Store Sales
Chipotle's same-store sales (SSS) grew by 5.4% in Q4, which, while still reflecting growth, disappointed some market expectations. Healthy store traffic with a 4% increase in transaction counts is a positive indicator, contrasting the challenges faced by many in the industry.

Profit Margins and Operational Strength
Chipotle's operating margin is noteworthy at 24.8%, contributing to a mid-to-high-teens overall company operating margin. This financial strength allows for continuous investment in growth initiatives and share repurchases, which are favorable for investors.

Future Growth Potential
Management's long-term target to reach 7,000 stores in North America suggests substantial growth potential. However, inflationary pressures and the company's ability to maintain pricing power while keeping revenue growth on track remains a critical factor moving forward.

Stocks: CMG