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Has Chipotle Stock Bottomed Out?

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Aug. 22 2017, Updated 1:21 p.m. ET

Stock performance

On August 21, 2017, Chipotle Mexican Grill (CMG) hit a new 52-week low of $304.50. However, the company’s stock price closed the day at $308.59, which represents a fall of 11.5% since the announcement of its 2Q17 earnings on July 25, 2017.

In 2Q17, analysts expected the company to post EPS (earnings per share) of $2.18 on revenues of $1.19 billion. The company posted an adjusted EPS of $2.32 on revenues of $1.17 billion. The company’s SSSG (same-store sales growth) was 8.1%—lower than analysts’ estimate of 9.7%. The lower-than-estimated 2Q17 SSSG and the downgrade by many analysts caused the company’s stock price to fall. The report of new food safety issues on July 14–17, 2017, at Chipotle’s restaurant in Sterling, Virginia, could have prompted analysts to downgrade the stock.

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Year-to-date performance

So far, 2017 continues to be a tough year for Chipotle. Since the beginning of 2017, the company’s stock price has fallen 18.2%. During the same period, Shake Shack (SHAK) and The Cheesecake Factory’s (CAKE) stock prices have fallen 13.6% and 30.2%, respectively.

Notably, the Consumer Discretionary Select Sector SPDR Fund (XLY) and the S&P 500 Index (SPX) have returned 8.6% and 8.5%, respectively. XLY has invested 12.8% of its holdings in restaurant and travel companies.

Series overview

In this series, we’ll look at analysts’ revenue and EPS estimates for the next four quarters. Finally, we’ll conclude this series by looking at Chipotle’s valuation multiple and analysts’ recommendations.

In the next part, we’ll look at analysts’ revenue estimates for the next four quarters.

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