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Chipotle Stock Rose after Raymond James’s Upgrade

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Aug. 18 2020, Updated 5:14 a.m. ET

Stock performance

Raymond James’s upgrade of Chipotle Mexican Grill (CMG) on January 19, 2018, appears to have increased investors’ confidence, leading to a rise in Chipotle’s stock price.

By the end of January 19, Chipotle was trading at $343.87, a rise of 1.9% compared to its previous day’s closing price.

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Year-to-date performance

The year 2017 was a tough one for Chipotle, with its stock falling 23.4%. However, it’s started 2018 on a strong note. Since the beginning of 2018, the company’s stock price has risen 19.0%. Comparatively, its peers Shake Shack (SHAK) and the Cheesecake Factory (CAKE) have returned 0.7%, and 0.3% year-to-date, respectively. The S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY), the broader comparative indexes, have returned 5.1% and 7.0%, respectively. XLY has invested 10.8% of its holdings in restaurants and travel companies.

Analysts’ estimates

For the next four quarters, analysts are expecting Chipotle to post revenue of $4.8 billion, which represents growth of 8.8% compared to its revenue of $4.4 billion in the corresponding four quarters of the previous year.

During the same period, the company is expected to post EPS (earnings per share) of $9.05, which represents growth of 75.4% compared to its EPS of $5.16 in the corresponding four quarters of the previous year.

Valuation multiple

On January 19, 2018, Chipotle was trading at a forward PE (price-to-earnings) multiple of 35.0x. On the same day, its peers the Cheesecake Factory and Shake Shack were trading at forward PE multiples of 17.8x and 76.7x, respectively.

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