Chipotle's revenue growth is commendable, with a 13% year-over-year increase in Q3 2024, reaching $2.79 billion. This was driven by same-store transaction growth of 5.4%. Digital sales represented 34.0% of total food and beverage revenue. However, comparable sales growth fell short of the consensus estimate of +5.7%.

Chipotle's growth is supported by operational improvements and a strong marketing plan. The company expects to open 315-345 new restaurants in 2025, with at least 80% including Chipotle lanes. International growth will accelerate, especially in Canada and the Middle East. However, the company faces risks from tariffs, inflation, and tough year-over-year comparisons.

Chipotle's valuation is high, with a forward P/E ratio of 38.72. The stock has a Valuation grade of D-. The company's operating margin missed the consensus expectation of 15.1%. EPS came in at $0.25 vs. $0.25 consensus and $0.21 a year ago.

Chipotle faces risks from tariffs, inflation, and tough year-over-year comparisons in the first half of 2025. The company's restaurant-level margin was down 60 basis points year-over-year to 24.8% of sales during the quarter. The company also faces risks from potential food safety issues.

Chipotle is set to introduce a limited-time menu innovation, the Honey Chicken menu item, which combines spicy and sweet flavors. The company is also leaning on a partnership with Paradox to introduce a new platform that leverages AI to make the hiring process more efficient for its restaurant teams.

Chipotle faces competition from other restaurant chains, including Taco Bell, Qdoba Mexican Eats, Moe's Southwest Grill, Del Taco, and El Pollo Loco. Seeking Alpha authors and Wall Street analysts are split on Chipotle, with the former viewing the stock as a Hold, the latter a Buy.

Restaurant chains could be significantly impacted if the Trump administration implements tariff hikes on food imported from Mexico and Canada. Chipotle's management has indicated that if tariffs remain in place, the company faces headwinds of ~60 basis points on total cost of sales.

Chipotle is committed to growing its employee count as it continues to pursue its long-term goal of having 7,000 restaurants in North America. International growth is still part of the unit growth story.

Chipotle's risk is manageable as the chain only sources ~2% of its total inputs from Mexico, mainly avocados, shifting a significant portion of supply to other Latin American countries. The company's impressive comparable traffic positioning gives confidence that CMG could implement another 60 basis points of higher pricing, if necessary.