What Happened:
Shares of mexican fast-food chain Chipotle (NYSE:CMG) jumped 8.4% in the morning session after the company reported fourth-quarter results with revenue, same-store sales, and EPS exceeding analysts' estimates. The company's outperformance was driven by strong year-on-year unit growth of 7.4%. It also got a pricing tailwind of 1.0% and opened more restaurants in the quarter than expected (121 vs estimates of 117). A highlight of Chipotle's 2023 was that it formed its first international partnership with franchisee Alshaya Group in the Middle East. Should the company lean into franchising more going forward, financial performance could improve since the franchise model generally yields higher-margin royalty revenue and requires less capital investments. Looking ahead, Chipotle expects same-store sales growth in the mid-single digits for 2024, along with 300 new store openings. Overall, this was a fantastic quarter that should have shareholders cheering.
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What is the market telling us:
Chipotle's shares are not very volatile than the market average and over the last year have had only 2 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Chipotle is up 20.2% since the beginning of the year. Investors who bought $1,000 worth of Chipotle's shares 5 years ago would now be looking at an investment worth $4,604.
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