Chipotle Mexican Grill has posted three tasty quarters of accelerating earnings growth. Now the burrito king has added the TikTok-inspired Fajita Quesadilla to its menu as CMG stock gets added to the IBD Breakout Stocks Index.
Although Chipotle did not join peers Wingstop, Texas Roadhouse, Yum China or Nathan's Famous on this month's list of new buys by the best mutual funds, investors have a hankering for CMG stock.
It sports a 1.3 up/down volume ratio and 86 funds with an A+ or A rating from IBD own shares in the restaurateur.
With a very strong 98 Composite Rating, Chipotle tops all restaurant stocks in IBD Stock Checkup. Texas Roadhouse and Wingstop both score a 96, while Darden Restaurants (90) and Yum China (89) round out the Top 5 industry leaders.
See Who Joins CMG Stock On The IBD Breakout Stocks Index
Chipotle Mexican Grill Serves Up Delectable Earnings Growth
Based in Newport Beach, Calif., Chipotle Mexican Grill owned nearly 3,200 restaurants in the U.S., Canada, United Kingdom, France and Germany at the end of last year. It is the only restaurant chain of its size that directly operates all its venues.
CMG stock posted three quarters of accelerating earnings growth, with EPS spiking 49% to $8.22 per share in Q4, much higher than Q1 2022's meager 6% growth to $5.70 per share. When Chipotle reports Q1 numbers on April 25, analysts expect that trend to continue with a 56% rise. Wall Street forecasts 28% earnings growth for the full year.
Last year, quarterly sales growth ranged from 11% to 17%, exceeding $2 billion in revenue each quarter.
TikTok-Inspired Innovations And More
To keep serving up earnings and sales growth, Chipotle continues to innovate and expand its offerings.
Tapping into a viral TikTok video showing a "hack" of an existing Chipotle quesadilla, the company took that feedback and launched a new menu item — Fajita Quesadilla. Launched this month, the quesadilla is a digital-only menu item on the Chipotle app and Chipotle.com.
Chipotle also recently added Chicken al Pastor to its menus in the U.S., Canada and Europe. The limited-time addition marked the first time that CMG stock has launched a new menu innovation globally.
In February, Chipotle Mexican Grill launched Farmesa, a new fresh eatery concept at Third Street Promenade in Santa Monica, California. As part of Chipotle's New Ventures project, which started last year, Farmesa features fresh ingredients served in bowls.
CMG Stock Looks To Roll Up Fresh Breakout
Chipotle Mexican Grill had a case of ingestion during last year's bear market, but appears to be shaking it off.
With its relative strength line rising again, CMG stock has found support and retaken its 10-week moving average. After flashing a string of up weeks while forming its current cup base, the stock is now closing in on a 1,724.81 buy point.
Weakness in the market indexes calls for caution, but strong earnings growth and promising technical action could mean Chipotle Mexican Grill is preparing a tasty move when market conditions improve.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
