Taylor Frigon Capital Management LLC now owns 25,051 shares of the company’s stock worth $622,000 after buying an additional 23,078 shares during the last quarter.
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The company’s profit margin shrunk from 26.6 percent to 19.6 percent and net income in the quarter was $67.9 million, a 44 percent decrease from a year earlier. With an impliedly steep premium P/E of 34.4X our ’16 estimate, below historic average but well above 18% long-term EPS growth, we still view Chipotle Mexican Grill as unattractive. After a series of foodborne illness outbreaks in 2015, Chipotle will close all of its restaurants for one day to hold a nationwide corporate meeting on food safety. The outbreak sickened people in 11 states.
The company’s E. coli scare hospitalized 22 people, crushed its “healthy food” image and scared away many customers across the country.
On the bright side, the US Centers for Disease Control and Prevention announced on Monday (Feb. 1) that the chain’s two E. coli outbreaks “appear to be over”. And on Tuesday, it said another subpoena had been issued by the U.S. Attorney’s office for the Central District of California, broadening the scope of the investigation.
In the report, founder and co-CEO Steve Ells gets right to the point: “The fourth quarter of 2015 was the most challenging period in Chipotle’s history”.
On the books cash and cash equivalents totaled $248 million at the end of the fourth quarter compared to $419.5 million a year ago.
Chipotle, for its part, has vowed to clean up its act, a promise which the company reiterated in its earnings statement. “With our full commitment to becoming an industry leader in food safety, and our continued focus on delivering an exceptional customer experience, we are confident that Chipotle will emerge as an even stronger company”.
The food safety scandal has led the Chipotle chain to revamp food safety policies, including implementing DNA testing on all ingredients before they are shipped to restaurants.
Chipotle co-CEO Monty Moran told investors during Tuesday’s earnings call that there is a federal statute concerning the sale of adulterated food. Company executives and health officials say they may never know what caused the outbreak, since any contaminated ingredients would now be long gone.
The burrito chain also posted its first sales decline since it went public in 2006. The Company operates 1,755 restaurants in the United States, seven in Canada, six in England, three in France, and one in Germany.
Those looking for optimist talk from Chipotle about a short-term rebound were instead met with a reluctant caution about the year to come.
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-Quote you on that: “2016 will be a very hard year relative to our past performance”.
