Chipotle Mexican Grill Stock Testing Price Floor – Buy Now?
Chipotle Mexican Grill (CMG) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($30.90 – $34.16), levels from which it has bounced meaningfully before. In the last 10 years, Chipotle Mexican Grill stock received buying interest at this level 3 times and subsequently went on to generate 30.2% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 4/26/2023 | 7.1% | 83 |
| 8/23/2023 | 3.8% | 15 |
| 10/30/2023 | 79.5% | 232 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For CMG Read Buy or Sell CMG Stock to see how convincing this buy opportunity might be.
The asset allocation strategies of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Here are some quick data points for Chipotle Mexican Grill that should help decision:
- CMG, YUM Top Starbucks Stock on Price & Potential
- Chipotle Mexican Grill Stock at Support Zone – Bargain or Trap?
- Better Value & Growth: CMG, YUM Lead Starbucks Stock
- CMG, YUM Look Smarter Buy Than Starbucks Stock
- Why Chipotle’s Selloff May Not Be Over Yet
- Better Value & Growth: CMG, YUM Lead Starbucks Stock
- Revenue Growth: 7.3% LTM and 11.9% last 3 year average.
- Cash Generation: Nearly 13.3% free cash flow margin and 16.9% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for CMG was 8.6%.
- Valuation: CMG stock trades at a PE multiple of 28.3
For quick background, Chipotle Mexican Grill provides fast-casual Mexican cuisine with approximately 3,000 restaurants across the United States, Canada, the United Kingdom, France, Germany, and Europe since 1993.
| CMG | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Restaurants | – |
| PE Ratio | 28.3 | 23.6 |
|
|
||
| LTM* Revenue Growth | 7.3% | 5.4% |
| 3Y Average Annual Revenue Growth | 11.9% | 5.2% |
| Min Annual Revenue Growth Last 3Y | 8.6% | -0.1% |
|
|
||
| LTM* Operating Margin | 16.9% | 18.7% |
| 3Y Average Operating Margin | 17.0% | 18.1% |
| LTM* Free Cash Flow Margin | 13.3% | 13.3% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
Chipotle isn’t immune to big drops. During the Global Financial Crisis, it fell about 75%. The 2018 correction hit it nearly 50%. Covid wasn’t much better, with a 50% dip. Even the more recent inflation shock pulled it down around 38%. Solid fundamentals matter, but this stock has shown it can still take a sharp hit when markets turn south.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read CMG Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.