Why Chipotle Mexican Grill Stock Is Up By 9% Today
Chipotle Mexican Grill Stock Rallies After Strong Earnings Report
Shares of Chipotle Mexican Grill gained strong upside momentum after the company released its fourth-quarter results.
The company reported revenue of $2 billion and adjusted earnings of $5.58 per share, beating analyst estimates on both earnings and revenue. On a year-over-year basis, total revenue grew by 22% while comparable restaurant sales increased by 15.2%.
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Importantly, the operating margin grew from 7.3% to 8.1% on a year-over-year basis, so inflation failed to put pressure on the company’s margins.
The company stated that it could grow the number of its restaurants to at least 7,000 in North America, up from the previous target of 6,000 restaurants. Chipotle Mexican Grill added: “Given the healthy and improving cash on cash returns, we are building a real estate pipeline that will allow us to accelerate unit growth to be in the range of 8% to 10% per year, with greater than 80% of new restaurants having a Chipotlane”.
What’s Next For Chipotle Mexican Grill Stock?
Analysts expect that Chipotle Mexican Grill will report earnings of $33.02 per share in the current year, so the stock is trading at 48 forward P/E which is not cheap. However, it should be noted that analyst estimates will likely move higher in the upcoming weeks after the strong quarterly report.
Back in 2021, Chipotle Mexican Grill stock made an attempt to settle above the $1,900 level, while the recent pullback pushed it towards the $1,300 level. Currently, the stock is trying to get above the $1,600 level as the market is optimistic about the company’s ambitious development plans.
At this point, the key question is whether the market’s optimism towards high-PE stocks will be sustainable. If worries about the impact of higher yields on high-PE stocks decline, Chipotle Mexican Grill stock will have a good chance to gain additional upside momentum and get closer to all-time high levels after the encouraging earnings report.
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