Chipotle’s stock (NYSE: CMG) went up by 0.1% to $1900 in the last five trading days. In comparison, Trefis’ Chipotle’s Valuation is $1783. Meanwhile, the broader S&P500 declined by 0.3% over the last five trading days. Since the start of the coronavirus pandemic, Chipotle’s stock has more than doubled as the company seamlessly shifted to its digital platform when the lockdowns hit across the globe. The stock continued to grow as the company continued to see revenue and earnings growth. In the last twelve months the company has recorded revenue of $5.8 billion while earnings for the same period were around $8.51. Now, will the company continue the upward trajectory over the coming weeks, or is a fall in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using multiple years of historical stock data, returns for CMG’s stock average around 2.2% in the next one-month (twenty-one trading days) period after rising 0.1% in a week (five trading days). But how would these numbers change if you are interested in holding CMG stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Chipotle stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF CMG stock moved by -5% over five trading days, THEN over the next 21 trading days, CMG stock moves an average of 2% with a 57.3% probability of a positive return over this period.
Some Fun Scenarios, FAQs & Making Sense of Chipotle Stock Movements
Question 1: Is the average return for Chipotle stock higher after a drop?
Case 1: Chipotle stock drops by -5% or more in a week
Case 2: Chipotle stock rises by 5% or more in a week
Is the average return for Chipotle stock higher over the subsequent month after Case 1 or Case 2?
CMG stock fares better after Case 2, with an average return of 2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.6% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Chipotle stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Chipotle stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For CMG stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for Chipotle after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
CMG’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Chipotle stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.