Chipotle: A Rather Tired Performance

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One does rather wish companies would simply make up their minds. Chipotle (CMG +1.38%), that purveyor of perfectly acceptable burritos, has presented figures that are, shall we say, less than dazzling. The after-hours trading reflected a certain…disappointment, and one can hardly blame the market. A rebound from the November lows, which seemed momentarily promising, is now looking distinctly wobbly.

The crucial metric – comparable restaurant sales – has actually declined. A most unpleasant surprise. And the full-year guidance? Let’s just say it lacks the sort of optimistic flourish one expects from a company commanding such a premium valuation. A P/E ratio of 35 demands a performance, not a politely murmured apology.

The Consumer: A Most Unpredictable Creature

Chipotle reports a 4.9% revenue increase, which, while not catastrophic, is a noticeable slowing from the previous quarter’s 7.5%. One suspects the modern consumer is proving…difficult. A fickle beast, prone to whims and, apparently, a disinclination to frequent establishments offering perfectly adequate Mexican-inspired fare.

The real trouble, however, lies in those comparable sales. After a fleeting moment of positivity last quarter, they’ve taken a decided turn south – down 2.5% for the full year. A most unwelcome development. The third quarter offered a brief respite – a mere 0.3% increase – but that feels like a distant, rather charming memory now.

The decline isn’t about fewer customers spending more, you see. It’s about fewer customers, period. Transactions are down 3.2%, which suggests people are actively avoiding the place. They’re compensating, admittedly, with slightly larger checks – a mere 0.7% increase – but that hardly solves the problem. It’s rather like rearranging the deck chairs on the Titanic, isn’t it?

Management, during their earnings call, spoke of an “evolving consumer dynamic.” A rather vague pronouncement, wouldn’t you agree? It sounds suspiciously like an excuse. One suspects they haven’t the faintest idea what’s going on.

And the guidance? Flat. Utterly, depressingly flat. One begins to wonder if a slightly more robust performance wouldn’t be too much to ask.

A Glimmer of…Something

There is, apparently, a silver lining. Sales trends improved throughout the quarter, and even into January. A most encouraging development, if one is inclined to be optimistic. Management also suggests their “strategic initiatives” will bear fruit. One hopes so. Though, given the circumstances, one remains cautiously skeptical.

They anticipate a negative first quarter, followed by improvement in the second half. A rather predictable pattern, really. It’s the sort of thing one might expect from a company desperately trying to convince investors that everything is under control.

The Valuation: A Touch Optimistic, Wouldn’t You Say?

Chipotle’s full-year comparable sales fell 1.7% in 2025. Against that backdrop, forecasting flat growth for 2026 hardly seems a cause for celebration. And yet, the stock continues to trade at a P/E multiple in the thirties. One struggles to see the logic.

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Perhaps Chipotle will surprise us. Perhaps those strategic initiatives will actually work. But the premium valuation already seems to price in a rather optimistic scenario. It’s a rather precarious position, wouldn’t you agree?

One begins to question whether a premium valuation is even justified anymore. Until the company can demonstrate a return to meaningful and consistent growth, the shares are starting to look distinctly overvalued. A rather tiresome state of affairs, really. One is tempted to simply move on to something a little more…reliable.

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2026-02-04 03:12