Stock Forecast: Chipotle (CMG) Stock Surges After Beating Earnings and Announcing Stock Buyback

  This article was written by Esther Hanon, a Financial Analyst at I Know First.  

[Source: REUTERS/Carlos Barria/File Photo, May 1, 2018]

Stock Forecast: Chipotle (CMG) Stock Surges After Beating Earnings and Announcing Stock Buyback:

"Job number one is to remind people why they love Chipotle. I think there [are] opportunities to use what we have and present it in new forms, new varieties, to get people re-engaged with what they love about Chipotle. There is an opportunity to bring in new flavors as well. One thing that's great is we got carnitas and chicken that people absolutely crave."

-- CEO Brian Niccol

Summary:

  • Shares of Chipotle Mexican Grill, Inc. have been on a post-earnings tear. While customer traffic trends have been weak ever since Chipotle's late-2015 E. coli outbreak, the company's profit margin came in well ahead of the company's plan for last quarter.
  • Chipotle reported earnings on Wednesday April 25, which sent the stock into orbit. Earnings blew past expectations, coming in at $2.13 per shares compared to consensus of $1.60 per share. Revenues were $1.15 billion, which were only in-line with analyst expectations.
  • Chipotle stock has added some 87 points, or 25%, since reporting earnings. While a move higher was undoubtedly warranted, the massive move higher has reached an extreme -- both on a fundamental and technical basis.
  • Chipotle Mexican Grill Inc. and DoorDash have partnered to make delivery service available at its more than 1,500 restaurants nationwide.
  • Chipotle is up nearly 48% for the year so far while the S&P 500 index is down 0.1% for the period.
  • CMG is increasing its buyback program by another $100 million. As of March 31, Chipotle had about $50.2 million available for repurchases from its previous buyback program, which had about $118 million at the end of last year.

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