CMG - Chipotle: Growth Beyond The Split But Valuation On Focus Hold

2024-06-30 09:29:15 ET

Summary

• Chipotle Mexican Grill reported strong earnings in Q1 2024, with revenue growing 14.1% to $2.70B and same-store sales rising 7%.
• The company's multifaceted strategy includes expanding in North America, focusing on international growth in Europe, and investing in digital sales.
• Chipotle's stock price has soared, but concerns remain about valuation compared to other companies in the sector.
• Initiating coverage with a Hold based on Chipotle healthy financials, expansion plans, and strong strategy. However, near-term volatility is possible due to approaching high resistance levels and overvaluation characteristics.

Investment Thesis

Chipotle Mexican Grill ( CMG ) is a fast casual restaurant chain, that continues to experience growth. They reported strong earnings in the first quarter of 2024, exceeding consensus expectations. Revenue grew 14.1% to 2.70B, operating margin kept increasing to 16.3% and same-store sales rose 7%. The company is optimistic about the future, projecting continued growth throughout the year....

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