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Chipotle Stock Fell ~6.0% after BMO’s Downgrade

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May. 23 2019, Published 11:51 a.m. ET

Stock performance

After BMO’s downgrade, Chipotle Mexican Grill (CMG) was trading down in early morning trade on May 23. At 11:15 AM EST, Chipotle was trading at $664.28, which represents a fall of 5.9% from the previous day’s closing price.

Chipotle has returned 63.5% YTD (year-to-date) as of May 22. The strong first-quarter performance and investors’ optimism surrounding the company’s implementation of digital advancements led to an increase in the company’s stock price. In the first quarter, the company posted an adjusted EPS of 3.40 on revenues of $1.31 billion, which beat analysts’ EPS estimate of $3.01 and revenue estimate of $1.31 billion. The company’s SSSG (same-store sales growth) of 9.9% beat analysts’ estimate of 7.3% during the quarter. After reporting an impressive first-quarter SSSG, Chipotle’s management raised its SSSG guidance for 2019 to the mid to high-single-digits compared to its previous guidance of a mid-single-digit range.

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Analysts’ estimates for 2019

For 2019, analysts expect Chipotle to report revenues of $5.42 billion, which represents a rise of 11.5% from $4.86 billion in 2018. For the same period, analysts expect the company’s EPS to rise 44.1% to $13.05.

Valuation multiple

The rise in Chipotle’s stock price since the beginning of 2019 has raised its valuation multiple. As of May 22, the company was trading at a forward PE ratio of 48.7x compared to 36.1x at the beginning of 2019. On the same day, Shake Shack (SHAK) and McDonald’s (MCD) were trading at forward PE ratios of 94.7x and 24.1x, respectively.

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