Chipotle Mexican Grill, Inc. (NYSE: $CMG) is a renowned fast-casual restaurant specializing in Mexican-inspired cuisine. Founded in 1993, the company has built a reputation for using fresh, high-quality ingredients and promoting sustainability in its operations. It specializes in customizable burritos, tacos, and bowls; it is a beloved brand among health-conscious consumers seeking flavorful and convenient dining options.
In a groundbreaking move on March 19, 2024, Chipotle’s Board of Directors approved a 50-for-1 stock split, subject to shareholder approval, at the company’s upcoming annual meeting on June 6, 2024. This colossal split would be one of the largest in New York Stock Exchange history, dramatically increasing the accessibility of Chipotle’s shares.
Details of Chipotle’s Stock Split
If the proposed amendment to Chipotle’s Certificate of Incorporation receives the shareholders’ nod, each existing share will be divided into 50 smaller, more affordable portions. Shareholders on record as of June 18, 2024, will receive 49 additional shares for each share held, with distribution scheduled for after markets close on June 25, 2024. Trading on a post-split basis is expected to commence on June 26.
According to Chipotle CFO Jack Hartung, this unprecedented 50-for-1 split marks Chipotle’s first stock division in its 30-year journey. It will open doors for employees and attract a broader range of investors at a time when CMG stock is riding an all-time high propelled by record revenues, profits, and growth.
Rewarding Tenured Employees
Alongside the split, Chipotle has announced plans to grant a one-time equity reward to restaurant general managers and crew members who have dedicated over two decades of service to the company. This gesture underscores Chipotle’s commitment to its long-serving workforce, the backbone of its success.
Spectacular Financial Performance in 2023
Chipotle’s decision to pursue a stock split follows a phenomenal financial year in 2023. Total revenue soared 14.3% to reach $9.9 billion, while comparable restaurant sales saw a 7.9% increase. Operating margin improved significantly to 15.8%, up from 13.4% in the previous period.
The company’s restaurant-level operating margin exhibited an impressive 230 basis point rise to 26.2%. Diluted earnings per share skyrocketed 38.4% to $44.34, and adjusted diluted earnings per share climbed 36.9% to $44.86. Net income for 2023 stood at a staggering $1.23 billion, exemplifying Chipotle’s profitability.
Chipotle’s Optimistic Outlook for 2024
Chipotle’s outlook for 2024 is equally promising, with projections of mid-single-digit growth in full-year comparable restaurant sales. The company plans to aggressively expand between 285 to 315 new restaurants, barring significant delays. Additionally, Chipotle anticipates an effective full-year tax rate of 25% to 27%, excluding discrete items.
Chipotle (CMG) Stock Performance
On late Tuesday, March 19, 2024, Chipotle’s stock surged to an all-time high price of over $3,023.56, marking an impressive surge of over 70% in the past year. This upward trajectory has been consistent since the company exceeded market expectations for quarterly profit and sales in February.
The S&P500 52-week Change stands at 31.54%, reflecting the company’s strong momentum. Moreover, its 50-day Moving Average is $2,533.65, while the 200-day Moving Average is $2,153.53. The stock’s 52-week high and low are $2,813.99 and $1,609.13, respectively. With an average volume of 204.91k shares traded over the past three months, Chipotle commands a significant presence in the market, boasting a market capitalization of $76.712 billion.
Bullish Analyst Sentiment
Wall Street analysts are bullish on CMG shares, with a 12-month average price target of $2,744.11 among 28 analysts over the past three months. The highest forecast stands at an impressive $3,100, while the lowest is $2,100. Notably, 20 out of 28 analysts recommend buying Chipotle shares.
Jon Tower, a director and restaurant analyst at Citi, praised Chipotle’s strengths, citing its momentum, appeal to younger and wealthier demographics, and potential for domestically and internationally growth. As long as employment and wages continue to rise, Chipotle can modestly increase prices in line with inflation, Tower stated. Its strong consumer proposition and momentum make it thrive despite market uncertainties.
Should You Buy CMG Stock?
The unanimous approval of Chipotle’s historic 50-for-1 stock split underscores its remarkable success and positions it for greater accessibility and growth. With a stellar financial performance in 2023, an optimistic outlook for 2024, and bullish analyst sentiment, the fast-food giant’s stock remains an attractive buy for investors seeking exposure to the resilient fast-food sector.
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