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Based in Newport Beach, California, Chipotle Mexican Grill, Inc. (CMG) operates quick-casual and fresh Mexican restaurant chains. With a market cap of $77 billion, the company offers a focused menu of burritos, bowls, quesadillas, tacos, and salads.
Companies valued at $10 billion or more are generally labeled as “large-cap” stocks, and Chipotle Mexican Grill fits this criterion perfectly. The company runs approximately 3,500 restaurants as of Jun. 30, 2024, and is renowned for using fresh-quality ingredients and offering various customization.
Shares of this fast-food chain have declined 21.1% from their 52-week high of $69.26, achieved on Jun.18. CMG stock has dropped over the past three months, lagging behind the broader Dow Jones Industrials Average’s ($DOWI) nearly 6.5% returns over the same time frame.
Longer term, CMG stock is up 19.4% on a YTD basis, outperforming DOWI’s 9% gains. Moreover, shares of the stock have rallied 40.9% over the past 52 weeks, surpassing DOWI’s 17.9% return over the same time frame.
CMG has been trading above its 200-day moving average recently but has been trading below its 50-day moving average since late August.
CMG’s outperformance over the past year is primarily driven by restaurant-level operating margin expansion, menu innovation, price increases, and good execution of the company’s digital strategies.
However, the stock fell 1.9% after its Q2 earnings release on Jul. 24, despite earnings of $0.33 per share, beating Wall Street estimates of $0.31 per share, and revenues of $2.97 billion beating estimates of $2.94 billion. Moreover, the company’s more than 11% decline over the past three months is attributed to various reasons, including CEO Brian Niccol's departure and investor pessimism surrounding an online customer backlash over claims that CMG reduced portion sizes while increasing prices.
Its rival, Yum! Brands, Inc. (YUM) has gained 3.7% over the past 52 weeks and 2.9% on a YTD basis, lagging behind CMG over these time frames.
Despite the stock underperforming the broader market recently, analysts remain moderately optimistic about its prospects. CMG has a consensus rating of “Moderate Buy” from the 30 analysts in coverage, and the mean price target of $62.57 suggests a premium of 14.7% to its current levels.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
