Stock (Symbol) |
Chuy’s (CHUY) |
Stock Price |
$33 |
Sector |
| Retail & Travel |
Data is as of |
| November 30, 2015 |
Expected to Report |
| Feb 29 – Mar 4 |
Company Description |
 Chuy’s is a full service restaurant concept company offering a menu of Mexican and Tex Mex inspired food. The Company operates its restaurants under the name Chuy’s. As of December 28, 2014, the Company operated 59 Chuy’s restaurants across 14 states. The Company offers lunch and dinner, which includes enchiladas, fajitas, tacos, burritos, combination platters and daily specials, variety of appetizers, and soups and salads. Each of its restaurants also offers a variety of homemade sauces, including Hatch green chile and creamy jalapeno sauces. It also offers a bar in all of its restaurants providing its customers a variety of beverage offerings, featuring a selection of specialty cocktails, including its on-the-rocks margaritas made with fresh, hand-squeezed lime juice and the Texas Martini, a made-to-order, hand-shaken cocktail served with jalapeno-stuffed olives. Source: Thomson Financial |
Sharek’s Take |
 Could Chuy’s (CHUY) be the next Chipotle? I think not, but to me if CHUY stock did almost as good as Chipotle’s that would be better anyway. CMG stock opened at $45 in January 2006 and is now $515 — a ten-bagger within ten years. Now let’s look at how big the competition is. Taco Bell is the biggest restaurant chain in the US with around 6000 stores, followed by CMG at 1800. Next is the trio of Qdoba, Dell Taco and Moe’s with around 600 locations. CHUY has 60 locations now, and I feel it can get be a Qdoba/Dell Taco/Moe’s and grow to 600. If the sales rise 10x then perhaps the stock can too as the company is improving profit margins as it grows. In the past Chuy’s has grown stores 28% a year, if it grows 25% going forward it will take ten years to get to 600 locations. My my napkin analysis shows Chuy’s has the ability to be a ten-bagger, and be the next Chipotle. |
One Year Chart |
 I like this stock chart — nice and tight with an upward bias. Would be nice if all my charts looked like this. Sales grew 15% last qtr with a 4% rise in same store sales. Lower food costs helped grow profits 26%. Qtrly estimates show -7%, +21%, +3% and +25% profit growth the next 4 qtrs, which isn’t great, but CHUY has beaten the street the last three qtrs. Christmas falling on the weekend will hurt next qtr’s results, as will year-end opening costs. |
Fair Value |
 With its ten-gallon growth opportunity, CHUY has typically garnered a high P/E ratio even though profits haven’t grown every year. My Fair Value on CHUY is 36x earnings, implying a stock price of $37 next year and $41 in 2017. |
Bottom Line |
 Chuy’s is a relatively small Mexican restaurant chain with a ton of growth opportunity. But this will take time, and the company may not grow consistently qtr by qtr. Also note the stock price hasn’t delivered consistent growth. Long term, Chuy’s has the ability to grow from 60 stores to 600 and the stock price might have the ability to rise ten-fold as well. The company also has no long-term debt. Chuy’s ranks 22nd of 36 stocks in the Growth Portfolio Power Rankings. The stock has lost some momentum recently, and with the stock close to its Fair Value I’ll sell it from the Aggressive Growth Portfolio around $33. |
Power Rankings |
Growth Stock Portfolio
22 of 36Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
