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- Before that, the company had also bumped up its prices in June 2021, a move it attributed to a hike in hourly wages for employees to $15 an hour.
- But Chipotle paused its price hikes as some customers pulled back on restaurant spending and ingredient costs stabilized.
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- “The [Chipotle] brand is very strong and the value proposition is very strong, and we have that pricing power to use,” Niccol told investors during the call.
But the total appreciation from the 22 IPO price to the 2015 high? More locations followed and, in 1998, McDonald’s (MCD) took a minority stake in Chipotle. Soon, the world’s biggest burger chain became the burrito chain’s biggest investor, which allowed Chipotle to expand from 14 locations in 1998 to over 500 by 2005. And Chipotle lovers sounded off in the comment section of a viral TikTok on “the downfall of Chipotle” in July. They recalled a time when their chicken burrito bowl only cost $7.99 — and longed for a taste of a Chipotle burrito from 2011. Faced with the reality of everything costing more, it may be that Tex-Mex fans are willing to pay a little extra for the luxury of a burrito with some queso and guac on the side for the time being.
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The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. An industry with a larger percentage of Zacks Rank #1’s and #2’s will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4’s and #5’s. The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank. Investors looking for an economic moat and strong profits will appreciate this company’s success. Here is one stock that could potentially benefit from a stock split.
A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, xm.com forex broker review change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations. If we multiply this figure by FY2024 earnings estimates of $52.50, Chipotle’s fair value comes in at $1,730 per share (18-month price target).
It priced at 22 a share, above the expected range of 18-20, and closed at 44 the first day. Within the first two years, CMG stock soared more than 600% from its IPO price. Chipotle Mexican Grill, which staged a breakout after its latest earnings report, customizable hiring software rfp template has come a long way from a deep dive during the coronavirus stock market crash. Data are provided ‘as is’ for informational purposes only and are not intended for trading purposes. Data may be intentionally delayed pursuant to supplier requirements.
Founder Steve Ells opened the first location in Denver with money borrowed from his father. The custom burrito concept proved popular, with the restaurant selling more than 1,000 burritos a day after just one month. The price increases come as other chains, like Shake Shack and Taco Bell, have raised their prices over the past two years. Months before that, in the first quarter of 2022, Chipotle raised its prices by 4%. That was on top of another increase in June 2021, which the company said was to offset the cost of paying Chipotle employees more.
So, while there’s no question that Chipotle is one of the better names to purchase on corrections for investors looking for growth in the Retail/Restaurant space, it’s hard to argue that it’s anywhere near the best value here, even if the sector is down substantially from its highs. Moving over to industry-wide trends, one positive for the industry has been the cool down in commodity inflation, with several restaurant brands actually expecting commodity deflation in the back half of the year in some areas of their market basket. Despite apparently rising costs, Chipotle’s 2023 second quarter report saw a 13.6% increase in revenue year over year, bringing the overall number to $2.5 billion. The eatery also opened 47 new restaurants with 40 locations including a Chipotlane drive thru.
- Chipotle released its Q2 results in late July, beating earnings by ~3% with quarterly earnings per share of $12.65 (+36% year-over-year), and posting solid results across the board.
- This continues to leave Chipotle as one of the highest capitalization names, just shy of Starbucks (SBUX) and McDonald’s (MCD) which hold the #2 and #1 spots, respectively.
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CMG’s historical performance
against its industry peers and the overall market. - It also remains unclear when the price hikes will go into effect.
The chain’s last price increase came in August 2022 when some customers began paying $1 or more additional for the same menu items as before. Before this, Chipotle increased prices about 3.5 to 4% in June of 2021, citing a raise in employee wages, and then again in the first quarter of 2022, also around 4%. After the close Oct. 21, Chipotle reported Q3 EPS of $3.76, a 1.6% slip from the same year-ago quarter. Revenue rose 14.1% to $1.6 billion, edging past views for $1.59 billion.
Chipotle stock formed a double-bottom base with a 1,366.76 buy point, according to MarketSmith chart analysis. It first broke out in mid-December, before pulling back below the entry to its 50-day moving average. A B+ Accumulation/Distribution Rating points to more recent net selling vs. buying by mutual funds. The highly regarded Fidelity Contrafund (FCNTX) has been a longtime shareholder. “As a result, Q3 digital sales grew 202% year-over-year to $776 million and represented 49% of sales. Assuming this momentum continues in Q4, we believe digital sales could exceed $2.5 billion in 2020, more than double what we did last year.” Chipotle stock was hot right out of the gate, doubling in price at its Jan. 26, 2006, debut.
Company
These factors could affect its ability to meet Q3 earnings per share estimates of ~$10.70 unless it leans on share repurchases to improve its per share growth. Zacks provides the average brokerage recommendation (ABR) for thousands of stocks for most the most suitable account type for me of the leading investment web sties. The ABR is the calculated average of the actual recommendations (strong buy, hold, sell etc) made by the brokerage firms for a given stock. Chipotle has serving up several price hikes over the last few years.
Chipotle Mexican Grill Shareholder
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Based on ~27.6 million shares and a share price of $1,780, Chipotle trades at a market cap of ~$49.1 billion and an enterprise value of ~$51.0 billion. This continues to leave Chipotle as one of the highest capitalization names, just shy of Starbucks (SBUX) and McDonald’s (MCD) which hold the #2 and #1 spots, respectively. And while the company has rightfully commanded a premium multiple for its domination of the burrito space in North America and near ~400% growth in its store count since 2007, the stock’s premium multiples are getting more and more difficult to justify in the current interest-rate environment. Chipotle released its Q2 results in late July, beating earnings by ~3% with quarterly earnings per share of $12.65 (+36% year-over-year), and posting solid results across the board. This included 47 new restaurants that were opened, 13% revenue growth in the period to a record ~$2.51 billion, and a 230 basis point improvement in restaurant-level margins which came in at 27.5%.
Chipotle Mexican Grill (NYSE: CMG)
A fast-casual restaurant chain, Chipotle Mexican Grill focuses on fresh and organic ingredients, tempting diners with gigantic burritos, salads, and more. For more ideas on the best stocks to buy or watch, investors can check IBD stock lists and other IBD content. An A SMR Rating (Sales + Profit margins + Return on equity) places Chipotle in the top 20% of all stocks based on those gauges. ROE of 25.5% was also the best in at least nine years — and meets the 17% minimum of most leading growth stocks. Digital sales surged 202.5% and accounted for 48.8% of overall Q2 sales.
In August 2022, Chipotle raised the prices of its entrees by more than $1 for some customers. That increase followed a previous increase earlier that same year. Before that, the company had also bumped up its prices in June 2021, a move it attributed to a hike in hourly wages for employees to $15 an hour. Chipotle hiked its prices again in December 2021 by 4%, bringing the cost of menu offerings that year up 10% higher than they were in 2020. On the downside, it would take a lot to become interested in Chipotle, given that I am looking for a minimum 20% discount to fair value for large-cap growth stocks to ensure a margin of safety. And if we measure from a more conservative fair value estimate off $1,730, Chipotle’s ideal buy zone wouldn’t come in until $1,385, significantly below current levels and in line with where the stock bottomed in mid-2022.
Restaurant Earnings Season Revealed a New Pattern. What That Says About Consumers.
At that time, its prices were up roughly 10% compared to the year-ago period. Chipotle’s latest planned price increases come at a time when inflation is up once again. Consumer prices rose by an annual rate of 3.7% in August, marking the second consecutive month of rising costs, data from the U.S. It’s a trend economists expect to have continued in September, according to financial data company FactSet.
She didn’t detail which menu items would be affected and didn’t respond to follow-up questions. She did say that price increases would be “modest” — and are being taken to “offset inflation.” Laurie Schalow, chief corporate affairs officer at Chipotle, pointed to the state of the economy as the reason for the price hikes — the chain’s fourth in the past two years. Chipotle Mexican Grill, Inc., together with its subsidiaries, owns and operates Chipotle Mexican Grill restaurants. It offers burritos, burrito bowls, quesadillas, tacos, and salads. The company was founded in 1993 and is headquartered in Newport Beach, California.