Chipotle (CMG) Stock Rises 51% in a Year: More Upside Left? (2024)

Chipotle (CMG) Stock Rises 51% in a Year: More Upside Left? (1)

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Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) have risen 51.1% over the past year against a 4.1% decline in the overall industry. The company’s success is largely driven by strong digital initiatives, effective product branding and innovative menu offerings.

The Zacks Rank #3 (Hold) company boasts an impressive long-term earnings growth rate of 22.7%. Projections for 2024 indicate that its earnings and revenues are expected to increase 23.2% and 15%, respectively, from the year-ago levels. Nevertheless, rising costs for commodities and wages remain concerning.

Catalysts Driving Growth

Chipotle is intensifying its efforts to expand its digital program to drive growth, ensuring that digital ordering becomes more appealing for customers and more efficient for its restaurants. This digitization has improved its delivery system, bolstered by partnerships with Uber Eats and Grubhub, which are drawing in new customers.

Additionally, CMG has extended its digital capabilities into Canada and increased orders through collaborations with major third-party delivery services. To enhance the convenience of its digital ordering platform, management has introduced features such as unlimited customization, contactless delivery and group ordering.

In December 2023, Chipotle announced investments in Greenfield Robotics and Nitricity. Greenfield Robotics specializes in regenerative agriculture, using fleets of autonomous robots to weed fields without chemicals. Nitricity focuses on reducing greenhouse gas emissions by creating natural fertilizer products to ensure sustainability.

CMG is also testing smarter pickup times logic, based on different sales and deployment levels, to drive growth. Moreover, the company is exploring the use of robotics-based autonomous vehicles for delivery, which is expected to improve the customer experience in the near future.

Chipotle's emphasis on advertising initiatives is proving successful. The marketing team has effectively increased the brand's visibility, relevance and popularity. The recent comeback of the beloved Chicken Al Pastor as a limited-time offer exceeded expectations.
It also introduced the Carne Asada Quesadilla, showcasing the collaborative effort to reintroduce this popular menu item. This was especially noteworthy, considering that approximately 5% of U.S. beef meets its food integrity standards.

During the first quarter of 2024, management initiated promotions highlighting barbacoa, capitalizing on consumer insights which indicated a lack of awareness regarding it. Thus, CMG rebranded it as Braised Beef Barbacoa, highlighting it is slow-cooked, responsibly prepared beef seasoned with garlic and cumin, and hand-shredded. The campaign yielded positive results, driving increased transactions and spending. This apart, the company sustained the Behind the Foil brand campaign.

Focus on operations strengthens CMG’s core value proposition, offering customized, delicious culinary delights quickly with great hospitality. Operational enhancements and accessible menu pricing have fortified this proposition, leading to positive transaction comps throughout the year, with a 5% increase in 2023.

Chipotle (CMG) Stock Rises 51% in a Year: More Upside Left? (2)
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Chipotle, like other industry players, has been facing significant supply-chain challenges and inflation across most commodities and categories. During the first quarter of 2024, food, beverage and packaging costs were $779 million compared with $692.6 million reported in the prior-year quarter. The upside was primarily caused by beef and produce inflation, and a challenge in the protein mix resulting from the Braised Beef Barbacoa marketing initiative. Labor costs increased 13% year over year to $659.5 million. This was mainly due to wage inflation and higher performance-based compensation.

Key Picks

Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter negative earnings surprise of 21.4%, on average. The stock has risen 93.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests a rise of 27.5% and 36.7%, respectively, from the year-ago levels.

El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 19.4%, on average. Shares of LOCO have risen 54.6% in the past year.

The Zacks Consensus Estimate for LOCO’s 2024 sales implies growth of 1.5% from the year-earlier actuals.

Brinker International, Inc. (EAT - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have risen 64% in the past year.

The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5% and 39.2% growth, respectively, from the prior- year levels.

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Chipotle (CMG) Stock Rises 51% in a Year: More Upside Left? (2024)


Is Chipotle stock a buy or sell? ›

Buy Chipotle

Growth has been consistent after seeing its sales soar 26% in 2021 coming out of the understandably suppressed pandemic-related slowdown a year earlier. Revenue rose 14.4% in 2022, 14.3% in 2021, and up 14.1% in the first quarter of this year. Store-level growth remains impressive.

What is the highest Chipotle stock has ever been? ›

The latest closing stock price for Chipotle Mexican Grill as of June 03, 2024 is 3076.47.
  • The all-time high Chipotle Mexican Grill stock closing price was 3239.23 on May 10, 2024.
  • The Chipotle Mexican Grill 52-week high stock price is 3260.00, which is 6% above the current share price.

Who owns the most shares of Chipotle? ›

What percentage of Chipotle (CMG) stock is held by retail investors? According to the latest TipRanks data, approximately 1.75% of Chipotle (CMG) stock is held by retail investors. Who owns the most shares of Chipotle (CMG)? Vanguard owns the most shares of Chipotle (CMG).

What is the stock price forecast for Chipotle? ›

The average price target for Chipotle is $3,263.27. This is based on 26 Wall Streets Analysts 12-month price targets, issued in the past 3 months. The highest analyst price target is $3,600.00 ,the lowest forecast is $2,700.00. The average price target represents 6.07% Increase from the current price of $3,076.47.

Will Chipotle pay a dividend? ›

However, unlike other restaurant chains, Chipotle doesn't pay a dividend because it prefers to pour profits back into the business.

Why is Chipotle stock so strong? ›

CMG's stock growth can be attributed to Chipotle's strong financial performance and the recent 50-for-1 stock split announcement. CMG's positive performance can be attributed to restaurant-level operating margin expansion, menu innovation, price increases, and good execution of the company's digital strategies.

Is McDonald's owner of Chipotle? ›

In 2006, McDonald divested its stake in Chipotle, allowing the company to operate fully as an independent entity. This move allowed Chipotle to pursue its own growth trajectory and stay true to its core values. Throughout the 2000s and into the 2010s, Chipotle's popularity soared.

Is Chipotle Mexican owned? ›

It isn't owned by a Mexican company. Chipotle is an all American chain of fast food restaurants.

How much does a Chipotle owner make per year? ›

The average Chipotle restaurant makes $2.2 million in annual gross sales, with a profit margin of 22%. After costs, a Chipotle franchisee could potentially earn $80,000–$100,000 in profit per year. However, exact earnings depend on sales volume, location, competition, and operating expenses.

How high will CMG stock go? ›

The highest analyst price target is $1,500.00 ,the lowest forecast is $800.00. The average price target represents 42.46% Increase from the current price of $770.59.

Is Chipotle doing well financially? ›

Business is still booming

While many fast-food restaurants have been struggling with growth lately, Chipotle has still been posting strong numbers. For the first three months of 2024, revenue rose by 14% to $2.7 billion. And its comparable-store sales (comps) were also up 7%.

Why is CMG a good buy? ›

Chipotle Mexican Grill is also cash rich. The company has generated cash flow growth of 28%, and is expected to report cash flow expansion of 29.5% in 2024. With solid fundamentals, a good Zacks Rank, and top-tier Growth and VGM Style Scores, CMG should be on investors' short lists.

What is Warren Buffett buying stock? ›

Warren Buffett's stock purchases in the most recent quarter include Chubb Limited (CB) and Occidental Petroleum (OXY). HP Inc. (HPQ) and Paramount Global (PARA) are among Warren Buffett's stock sales in the most recent quarter.

Did McDonald's invest in Chipotle? ›

In 1998, Chipotle caught the attention of McDonald's, the global fast-food giant, which saw potential in the growing fast-casual segment. McDonald's made an initial investment in Chipotle, allowing for more rapid expansion.

Is Chipotle a growing company? ›

Chipotle Mexican Grill

Its sales jumped 14.3% year over year in 2023, with growth accelerating to 15.4% in the final quarter of the year. Additionally, earnings per share soared as the company's full-year operating margin expanded from 13.4% in 2022 to 15.8%.

Is McDonald's stock a buy sell or hold? ›

Is MCD a Buy, Sell or Hold? McDonald's has a consensus rating of Moderate Buy which is based on 19 buy ratings, 10 hold ratings and 0 sell ratings. The average price target for McDonald's is $311.38. This is based on 29 Wall Streets Analysts 12-month price targets, issued in the past 3 months.

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