Is Chipotle Stock Still a Buy After Earnings?
Chipotle stock is extending its recent slide despite a Q2 earnings beat, leaving some folks to wonder if it's still a buy. Here's what you need to know.
Chipotle Mexican Grill (CMG) stock jumped more than 5% in Wednesday's extended session after the burrito chain beat top- and bottom-line expectations in its second-quarter earnings report. However, shares quickly fell into the negative territory at the start of Thursday's session.
In the three months ended June 30, Chipotle said revenue increased 18% year-over-year to $3 billion, driven by new restaurant openings, a nearly 9% jump in restaurant traffic, and an 11% rise in comparable-restaurant sales. Its earnings per share (EPS) were up 36% from the year-ago period to 34 cents.
"The second quarter was outstanding as successful brand marketing, including the return of Chicken Al Pastor, drove strong demand to our restaurants," Chipotle CEO Brian Niccol said in a statement. "Our focus and training around throughput paid off as we were able to meet the stronger demand trends with terrific service and speed driving over 8% transaction growth in the quarter."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results exceeded analysts' expectations. Wall Street was anticipating revenue of $2.9 billion and earnings of 32 cents per share, according to CNBC.
As a result of its performance in the first half of the year, Chipotle reiterated its full-year outlook. It continues to anticipate comparable-restaurant sales growth in the mid- to high-single digits and expects to open between 285 and 315 new restaurants.
Is Chipotle stock a buy, sell or hold?
Chipotle stock had a strong start to 2024 and was up nearly 50% for the year to date through June 18. However, shares have been in a slump since Chipotle underwent a 50-to-1 stock split.
Still, analysts remain bullish on the consumer discretionary stock. According to S&P Global Market Intelligence, the average analyst target price for CMG stock is $63.71, representing an upside of more than 25% from current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Stifel is one of the more bullish outfits on CMG stock with a Buy rating and $70 price target.
"We believe the brand can continue to drive sales momentum utilizing new menu news, digital engagement and ongoing operational improvements," Stifel analyst Chris O'Cull said in a note following Chipotle's earnings release.
The analyst adds that Chipotle "has a considerable runway for new unit development" thanks to its Chipotlane drive-thru format that's "anticipated to reach a more meaningful percentage of the total footprint over the next few years, which should drive healthy margin expansion."
Stifel's $70 price target represents sits nearly 40% above where CMG stock is currently trading.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Colorado Sending Billions in TABOR Refunds
State Tax Are you receiving a TABOR refund with your 2025 Colorado state income tax filing? Don’t miss the deadline.
By Kate Schubel Published
-
How a Financial Adviser Can Help You Sleep at Night
When it comes to your money and planning for your retirement, legacy and more, you might need a professional to help you stay on top of it all.
By Neale Godfrey, Financial Literacy Expert Published
-
How a Financial Adviser Can Help You Sleep at Night
When it comes to your money and planning for your retirement, legacy and more, you might need a professional to help you stay on top of it all.
By Neale Godfrey, Financial Literacy Expert Published
-
Debunking the Myth of the Silver Spoon
Just because your family is wealthy doesn't mean life's all smooth sailing for your kids. When family dynamics are complicated, communication is key.
By Elizabeth Chand, Esq. Published
-
Stock Market Today: Nasdaq Hits New High Ahead of Alphabet Earnings
The Google parent is one of several mega caps reporting earnings this week, with results due out after Tuesday's close.
By Karee Venema Published
-
Why Pfizer Stock Is Lower After a Beat-and-Raise Quarter
Pfizer stock is down Tuesday even after the drugmaker reported higher-than-expected Q3 earnings and raised its full-year outlook.
By Joey Solitro Published
-
McDonald's Stock Stabilizes After Earnings. Is It Time to Buy?
McDonald's stock is moving cautiously higher Tuesday after the fast-food chain beat Q3 expectations, but E. coli concerns remain.
By Joey Solitro Published
-
Is PayPal Stock Still a Buy After a Revenue Miss?
PayPal stock is falling Tuesday after the payments giant reported mixed third-quarter results, but most of Wall Street remains bullish.
By Joey Solitro Published
-
The Tax Rules to Consider Before Buying an Annuity
Annuities can play a valuable role in your retirement plan — as long as the tax implications have been properly factored in. Here's an outline of the key rules.
By Carlos Dias Jr., Wealth Adviser Published
-
Beware of 'Buy a Business' Coaching Scams
Just because someone says they can make you rich by helping you buy the business of your dreams doesn’t mean they actually have the expertise to do that.
By H. Dennis Beaver, Esq. Published