aceskc Posted February 14, 2018 Share Posted February 14, 2018 $100 turnaround valuation seems harsh...CMG reported ~6 in reported earnings...adjusting for growth capex (~143M) and card breach one time payment (30M) , you get an after tax net earnings of an additional ~4.. So we have ~10 adj. eps, ~4.5B revenue that grew 15%, ~18 net cash per share, ~3.3% share buyback. Bias Disclaimer: Im a buyer here. In addtion, 'Breakfast daypart' also might be the hidden ace up his sleeve, which could catalyze SSS , even absent any successful menu innovation initiatives. "Under his leadership, he successfully repositioned Taco Bell as a lifestyle brand and successfully launched numerous product initiatives, including the new breakfast daypart, the fastest growing daypart in the industry. He transformed Taco Bell into a social media leader and revolutionized its digital approach through mobile ordering and payment across their 7,000 restaurants. He also created a people-centric innovation culture that has been recognized throughout the industry." Link to comment Share on other sites More sharing options...
johnny Posted February 14, 2018 Share Posted February 14, 2018 They've been working (intermittently) on breakfast for years, and developed nothing. Might be a bit gun-jumpy to assume he's coming to the table with a brilliant plan there. The taco bell breakfast offering is unbelievable trash, and works just fine for the sort of people who have made peace with their lives as taco-bell customers, but if Chipotle plans on selling breakfast burritos at $10 per transaction, they're going to need something that I doubt he has any unique ability to provide. Honestly, this seems like a potential branding catastrophe. Let's hope that everybody is aware of that, and their willingness to run that risk speaks to their confidence in his actual abilities. Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted February 14, 2018 Author Share Posted February 14, 2018 This is great news! I thought Chipotle needed some new and innovative ideas and this hiring proves it. This turnaround will take time but i’m Confident in the new CEO. Link to comment Share on other sites More sharing options...
mwtorock Posted February 14, 2018 Share Posted February 14, 2018 Have not looked into the new CEO yet. Just a quick glance at this morning's newspaper. Could you share a bit more about why you're so confident in him? The first thing came to my mind was the JCP drama that involved a new CEO and Pershing Square. Not saying this time it would be the same, but would like to know more about his strategies or plans for the turnaround. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 14, 2018 Share Posted February 14, 2018 $100 turnaround valuation seems harsh...CMG reported ~6 in reported earnings...adjusting for growth capex (~143M) and card breach one time payment (30M) , you get an after tax net earnings of an additional ~4.. So we have ~10 adj. eps, ~4.5B revenue that grew 15%, ~18 net cash per share, ~3.3% share buyback. Bias Disclaimer: Im a buyer here. In addtion, 'Breakfast daypart' also might be the hidden ace up his sleeve, which could catalyze SSS , even absent any successful menu innovation initiatives. "Under his leadership, he successfully repositioned Taco Bell as a lifestyle brand and successfully launched numerous product initiatives, including the new breakfast daypart, the fastest growing daypart in the industry. He transformed Taco Bell into a social media leader and revolutionized its digital approach through mobile ordering and payment across their 7,000 restaurants. He also created a people-centric innovation culture that has been recognized throughout the industry." Yo quiero 10x EV/EBIT. Link to comment Share on other sites More sharing options...
Spekulatius Posted February 15, 2018 Share Posted February 15, 2018 $100 turnaround valuation seems harsh...CMG reported ~6 in reported earnings...adjusting for growth capex (~143M) and card breach one time payment (30M) , you get an after tax net earnings of an additional ~4.. So we have ~10 adj. eps, ~4.5B revenue that grew 15%, ~18 net cash per share, ~3.3% share buyback. Bias Disclaimer: Im a buyer here. In addtion, 'Breakfast daypart' also might be the hidden ace up his sleeve, which could catalyze SSS , even absent any successful menu innovation initiatives. "Under his leadership, he successfully repositioned Taco Bell as a lifestyle brand and successfully launched numerous product initiatives, including the new breakfast daypart, the fastest growing daypart in the industry. He transformed Taco Bell into a social media leader and revolutionized its digital approach through mobile ordering and payment across their 7,000 restaurants. He also created a people-centric innovation culture that has been recognized throughout the industry." Yo quiero 10x EV/EBIT. I agree that $100/ share is harsh, but turnarounds are hard to do. donfar, the growth caped they are spending hasn’t done much, so bear case (beer case?) may be that’s its money down the drain. $6 in earnings for a $100 share isn’t thwt cheap optically. I have seen stranger things in life than a turnaround at 16x earnings. Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted March 1, 2018 Author Share Posted March 1, 2018 Thank goodness! Chipotle is shutting down it's Tasty Made concept. Ideally when their stock recovers they should purchase a burger chain. I would like them to expand Pizzeria Locale. https://www.eater.com/2018/3/1/17066484/chipotle-tasty-made-closed Link to comment Share on other sites More sharing options...
DCG Posted March 1, 2018 Share Posted March 1, 2018 They've been working (intermittently) on breakfast for years, and developed nothing. Might be a bit gun-jumpy to assume he's coming to the table with a brilliant plan there. The taco bell breakfast offering is unbelievable trash, and works just fine for the sort of people who have made peace with their lives as taco-bell customers, but if Chipotle plans on selling breakfast burritos at $10 per transaction, they're going to need something that I doubt he has any unique ability to provide. It seems like for breakfast burritos, you make scrambled eggs and bacon. The rest of the toppings are the same as they already have. Maybe add potatoes. $10 would be a tough selling point though. Link to comment Share on other sites More sharing options...
DooDiligence Posted March 2, 2018 Share Posted March 2, 2018 They've been working (intermittently) on breakfast for years, and developed nothing. Might be a bit gun-jumpy to assume he's coming to the table with a brilliant plan there. The taco bell breakfast offering is unbelievable trash, and works just fine for the sort of people who have made peace with their lives as taco-bell customers, but if Chipotle plans on selling breakfast burritos at $10 per transaction, they're going to need something that I doubt he has any unique ability to provide. It seems like for breakfast burritos, you make scrambled eggs and bacon. The rest of the toppings are the same as they already have. Maybe add potatoes. $10 would be a tough selling point though. A sausage, egg, and cheese Taquito at Whataburger costs around $2.50 (and they're really good.) Link to comment Share on other sites More sharing options...
DTEJD1997 Posted March 2, 2018 Share Posted March 2, 2018 They've been working (intermittently) on breakfast for years, and developed nothing. Might be a bit gun-jumpy to assume he's coming to the table with a brilliant plan there. The taco bell breakfast offering is unbelievable trash, and works just fine for the sort of people who have made peace with their lives as taco-bell customers, but if Chipotle plans on selling breakfast burritos at $10 per transaction, they're going to need something that I doubt he has any unique ability to provide. It seems like for breakfast burritos, you make scrambled eggs and bacon. The rest of the toppings are the same as they already have. Maybe add potatoes. $10 would be a tough selling point though. I would think $10 would be an impossible price point... When I lived in Houston...there was a Mexican bakery. Of course they would bake bread, donuts, churros, pastries & such...but their specialty was breakfast tacos. They would open about 4 AM & workers going into the refineries would eat there before their shift started. They also did a tremendous business with salesmen/contractors would buy a "tray" of tacos and take them to the plant(s). EVERYBODY loved to see a sales guy with a tray of breakfast tacos (20?). Of course, locals would also eat there. MANY people of Mexican and Central/South American descent would eat there...but TONS of Anglos too. Everybody liked their tacos. I think their secret ingredient was lard...but the eggs tasted out of this world. They had maybe 20-30 different things you could put in the tacos. Of course, the tortillas were hand made on the premises. EVERYTHING was fresh. They must have had 12-15 workers in the morning preparing these things. It was a multi-million dollar operation. They had TWO different kinds of scrambled eggs, Mexican & American, you could get refried beans, rice, bacon, beef, chorizio, grilled vegetables, onion, tomatoes, cheese, potatoes (marinated in a hot spice?)., Pico de Gallo that was simply one of the best I've ever had. Two tacos were MORE than enough for a meal...If you ate three, you would probably be skipping lunch. C&D bakery was (is) a family run operation. I checked on the interweb, and it appears that they had a fire in Jan. 2018 and have relocated to a new location. These guys had an interesting and incredible business model. I've always though that would be an interesting niche. Once you have a well done breakfast taco...you don't go back to eating a taco bell, that is for sure! So if Chipotle can do it RIGHT, I think they may be on to something...of course, execution is key. Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted April 26, 2018 Author Share Posted April 26, 2018 Another profitable quarter! Announced a $100 million share buyback program. Up $50- this morning. Link to comment Share on other sites More sharing options...
peterHK Posted April 26, 2018 Share Posted April 26, 2018 Gotta admit I don't get the valuation here. If normalized net income margins are say 8%, you get ~$13/share in EPS on LTM sales. Means today, you have a business growing 8-10% topline that can grow normalized EPS maybe a tad higher than that at 10-12%, trading at 30x normalized earnings. At 20x I'd be interested as that would give me a nice margin of safety; but that's a $260 stock: a long way down from here. What am I missing here? Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted April 26, 2018 Author Share Posted April 26, 2018 Gotta admit I don't get the valuation here. If normalized net income margins are say 8%, you get ~$13/share in EPS on LTM sales. Means today, you have a business growing 8-10% topline that can grow normalized EPS maybe a tad higher than that at 10-12%, trading at 30x normalized earnings. At 20x I'd be interested as that would give me a nice margin of safety; but that's a $260 stock: a long way down from here. What am I missing here? Lots! You should have bought A LOT of shares at $260! Lots of potential. Great management team in place. No debt. Continue to open hundreds of locations every year. Share buybacks. International expansion. Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted April 27, 2018 Author Share Posted April 27, 2018 Chipotle CEO Brian Niccol talks with CNBC about turnaround plans: https://www.cnbc.com/video/2018/04/26/chipotles-new-ceo-on-his-turnaround-plans-and-his-favorite-order.html Link to comment Share on other sites More sharing options...
Guest roark33 Posted April 27, 2018 Share Posted April 27, 2018 Traffic down, SSS increase based entirely on price. That combination doesn't last. Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted August 15, 2018 Author Share Posted August 15, 2018 Traffic down, SSS increase based entirely on price. That combination doesn't last. Stock price just keeps on rising! https://www.cnbc.com/2018/08/15/morgan-stanley-upgrades-chipotle-sees-20-percent-surge-ahead.html Link to comment Share on other sites More sharing options...
thepupil Posted May 8, 2020 Share Posted May 8, 2020 anyone own or short this? I have some look-through exposure via Pershing Square and am surprised that Chipotle is up year to date and trading at 27x 2021 EBITDA and 27x 2019 EBITDA. 50x 2021 earnings and 50x 2019 earnings (I am not using 2020 for obvious reasons) Billy was trimming pre-covid and now can sell at higher prices, so maybe I just trust him to take care of this for me and exorcise the overvaluation from the portfolio (he bought at ~$400), but he could still own as much as $1 billion of this. Link to comment Share on other sites More sharing options...
mcliu Posted May 8, 2020 Share Posted May 8, 2020 I think they’re doing online sales so it will probably trade 20x P/S soon. :P Link to comment Share on other sites More sharing options...
Gregmal Posted May 8, 2020 Share Posted May 8, 2020 Yea I had my list of valuation shorts to hedge with and it came down to this or SAM. I went with SAM because CMG is very well run and who knows, there is a certain power associated with the whole 5lbs of rice with gristle for $11 that makes people go nuts. Where as SAM is run with a surfer bro culture and is pretty much driven by fads like hard cider, then soda and recently spiked seltzer, which should soon be hitting a wall. That said, both are still just valuation shorts and one should always expect to lose money with valuation based shorts. Link to comment Share on other sites More sharing options...
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