My Case for Chipotle
Chipotle has taken a beating in 2012, smashed down by lower than expected earnings, future earnings estimates, and the talk of competition with Taco Bell and raising their prices.
First off my views on the earnings reports of 2012. Chipotle met the consensus of the 26 analysts following the comapny in both the 1st and 3rd quarter reports and exceeded them for the 2nd quarter! Why would they go down one might ask? Because they lowered there growth estimates for the upcoming year. The point I think many are missing right now is that even though the growth estimates have been lowered they still are great, next year there is an expected growth rate of 16% or 12.72. Another thing to look at is since 2009 Chipotle has either met or exceeded there earings reports, so I believe these lowerings of future estimates are simply becuase Chipotle does not want to disapoint.
I believe the business believed to be taken away by Taco Bell either in the recent earning or future reports is absurd. Taco Bell is like the McDonalds of Coffee in comparison to Starbucks, yes some people do get there coffe from McDonalds but the ones who like Starbucks stick with Starbuks and that amount continues to grow. In this industry Chipotle's only real compition is Qdoba (owned by Jack in the Box) which is much smaller and I feel they really blow them away. At Taco Bell although there recent Cantina Bell menu has focues on "all natural ingredients" if someone really wants to be healthy they are not going to go to Taco Bell; it just doesnt make sense. Taco Bell is still fast food, they make it in the back off of a company recipe and give it to you pretty much right away. Chipotle is casual dining where you can get it to go but you personalize your meal to what you want, basically Subway but in the mexican food industry.
Overall I believe Chipotle is poised for a comback in 2013 and am seriously considering purchasing some shares. What do you think?