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.
-
Is Harris’s $25k Down Payment Assistance Good or Bad for Homebuyers?
Democratic Presidential candidate Kamala Harris plans to offer $25,000 in down payment assistance for first-time homebuyers. But is this good or bad for the housing market?
By Erin Bendig Published
-
What are Harris' and Trump's Positions on Capital Gains Taxes?
The Tax Letter Harris and Trump have different views on taxing capital gains. See what each candidate wants to do if elected to the White House.
By Joy Taylor Published
-
Women's Wealth Growing: How to Handle It Like a Pro
Even as women play catch-up because of the gender pay gap and caregiving responsibilities, they're winning financially.
By Tiffany Welka Published
-
Electing to Be an S Corporation: Benefits You Need to Know
Entrepreneurs who meet the requirements and choose to be an S corporation could see lower taxes and experience several other advantages.
By Derek A. Miser, Investment Adviser Published
-
Stock Market Today: UnitedHealth Selloff Drags on Dow
While the main indexes ended in the red, Walgreens Boots Alliance had its best day since 2008.
By Karee Venema Published
-
Boeing Looks to Raise Up to $25 Billion as Cash Woes Swirl
Boeing stock is higher Tuesday after the aerospace giant filed to raise as much as $25 billion and entered a credit agreement worth $10 billion.
By Joey Solitro Published
-
Is Goldman Sachs Stock Still a Buy After Earnings?
Goldman Sachs stock is struggling for direction Tuesday even after the financial giant beat expectations for its third quarter. Here's what you need to know.
By Joey Solitro Published
-
UnitedHealth Stock Leads Dow Lower After Earnings: What to Know
UnitedHealth Group stock is sinking Tuesday after the insurance giant revised its full-year profit outlook.
By Joey Solitro Published
-
Tips for Honing Your Bond Investing Strategy
Building a good, high-quality foundation is critical when selecting a mix of bond funds that match your risk tolerance and return objectives.
By Brandon Zureick, CFA® Published
-
How to Spot a Contractor Who's Not Playing by the Rules
Being a general contractor is not a game, yet some misrepresent what they're licensed to do. Here's a cautionary tale, plus some signs to watch for that something's off.
By H. Dennis Beaver, Esq. Published