In 2018, Chipotle Mexican Grill (CMG) stock returned 49.4%. Chipotle stock outperformed the broader equity market. The S&P 500 Index fell 6.2% during the same period. Shake Shack (SHAK) and McDonald’s (MCD) returned 5.1% and 3.2%, during the same period, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which has invested 7.8% of its holdings in restaurants and travel companies, returned 0.3% in 2018.
In the last few years, Chipotle stock was impacted negatively by a series of food safety issues. The issues started impacting the company at the beginning of December 2015. The food safety issues caused Chipotle stock to fall from its all-time high of $758.61 on August 5, 2015. However, investors’ optimism about the appointment of Brian Niccol as the company’s CEO in March and the company’s strong performance in the first three quarters of 2018 helped the stock price to rise in 2018.
In the first three quarters of 2018, Chipotle outperformed analysts’ EPS expectations. Chipotle posted same-store sales growth of 3.3%. During the same period, the company’s digital sales grew 34.4% to form 10.2% of its total sales. By the end of the third quarter, Chipotle had implemented the digitized second make-line in 750 restaurants and digital pickup shelves in 350 restaurants, which drove the company’s digital sales. In April, the company launched a delivery service in partnership with DoorDash, which also contributed to the digital sales growth.
Next, we’ll discuss analysts’ recommendations and Chipotle’s valuation multiple.