What Commodity Inflation? Chipotle Shares Surge After Earnings

Chipotle came out way ahead of analyst expectations with an EPS of $1.21 per share and shot up in after-hours trading.

The stock is up over 4%

Keep in mind this chain, which promotes the freshness of its meat and produce, is theoretically susceptible to commodity price increases.

However, it’s fourth-quarter net income jumped up 21.7% from the previous quarter despite those delicious tomatoes, green peppers and tomatillos being more expensive.

The chain was also hit by tough weather conditions including freezes in Mexico and Florida but it made it through the quarter without raising prices.

However the firm may have to reconsider increasing prices later in the year. Food costs accounted for 31% of its expenses for the fourth quarter which was an 0.9% increase from 2009. “There is potential to return to menu pricing in 2H11, though management prudently in wait-and-see mode, with margins industry leading,” wrote Barclay’s Jeffrey Bernstein.

Citigroup raised its 2012 EPS by $0.18 based on Chipotle’s same-store sales growth and strong momentum.

The company opened 62 restaurants during the fourth quarter and it plans to open 135 to 145 new shops this year. It raised its full-year earnings forecast and called for 2011 same-store sales growth of 4-6%.

For another incredible momentum stock that’s ripping the face of shorts, see what Whitney Tilson said yesterday about Netflix >

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