Chipotle Mexican Grill (NYSE: CMG), a popular fast-casual restaurant chain known for its fresh and organic ingredients in burritos and salads, recently announced a 50-to-1 stock split. This move aims to make the company’s stock more affordable for investors and attract more retail investors. The stock split does not add any value to the company but is often seen as a positive signal of management’s optimism for the future. Following the split, CMG stock now trades at around $66 per share, significantly lower than its previous price of nearly $3280 before the split. Analysts have revised Chipotle’s valuation to $66 per share based on expected earnings per share and a price-to-earnings multiple for the fiscal year 2024.
CMG stock has shown strong growth of 44% year-to-date, outperforming peers like McDonald’s (NYSE: MCD), which is down 13% since the beginning of the year. Chipotle’s positive performance can be attributed to factors such as restaurant-level operating margin expansion, menu innovation, price increases, and successful execution of digital strategies. The stock split announcement has also contributed to the momentum gained by CMG stock. Despite the recent strong gains, Chipotle’s stock performance has been volatile, with returns fluctuating between positive and negative over the past few years.
Consistently beating the S&P 500 index has been challenging for individual stocks in recent years, including popular companies like Amazon, Tesla, and Microsoft. However, the Trefis High Quality Portfolio, which includes a diverse collection of 30 stocks, has outperformed the benchmark index each year over the same period. Given the current uncertain macroeconomic environment, including high oil prices and elevated interest rates, there is speculation about whether Chipotle could underperform the S&P 500 in the coming year or experience a significant jump in performance.
Chipotle’s first-quarter earnings exceeded analyst expectations, with average restaurant sales increasing by 7% year-over-year to $3.1 million. Despite opening 47 new restaurants during the same period, the company reported healthy sales and profitability growth in Q1. Chipotle’s revenue grew by 14% year-over-year to $2.7 billion, driven by a 7% increase in comparable restaurant sales. The company’s earnings per share also rose by 27% year-over-year in Q1. Digital sales accounted for almost 37% of the core food and beverage business in the first quarter, indicating the continued strength of Chipotle’s digital offerings.
For the full year 2024, Chipotle is forecasting mid-to-high single-digit growth in comparable restaurant sales, assuming current sales trends continue. The company plans to open 285 to 315 new restaurants in 2024, with over 80% featuring Chipotlane drive-thrus. Chipotle’s reward program, launched in Q1 2019, now has over 40 million members who earn points for each purchase that can be redeemed for food. Peer comparisons show how Chipotle’s stock performance compares to its industry peers on key metrics.
Overall, Chipotle’s stock split and strong financial performance in the first quarter indicate optimistic prospects for the company. Despite recent volatility in the stock market, Chipotle’s focus on innovation, digital strategies, and expanding its restaurant footprint could contribute to continued growth and value for investors. As the company navigates the uncertain economic landscape, investors will be watching closely for any developments that could impact Chipotle’s stock performance in the coming months.
