Are Chipotle’s (CMG, $582.77) persistent problems finally fading?
Chipotle Mexican Grill has endured food-borne-illnesses and a persistent problem of attracting more customers. The burrito and bowl maker’s latest fourth quarter report revealed a stunning 6.1% comps growth, 2.2% of which came from increased transactions. This was the best comps result in nearly two years.
Restaurant level operating margin surged from 14.9% to 17% in Q4, even though it was lower than 18.7% in the third quarter, 19.7% in the second quarter, or 19.5% in the first quarter of the 2018.
The company attributes the sequential reduction in restaurant-level margins to a big increase in what Chipotle classifies as "other operating costs." These made up 15.5% of sales in the fourth quarter, versus 13.8% or less every other quarter in 2018. Further, Chipotle's tax bill is expected to fall in 2019. The company paid an effective tax rate of 34.2% in 2018, but it anticipates a 2019 effective rate of between 27% and 30%. The company also plans to open between 140 and 155 new restaurants this year, which would be a significant improvement from 2018.
Overall, this data shows that customers are willing to pay good price for good quality. The new CEO’s vision, restructuring and marketing strategies all seem to be working, for now.
CMG sees its Stochastic Oscillator ascending out of oversold territory
On May 30, 2023, the Stochastic Oscillator for CMG moved out of oversold territory and this could be a bullish sign for the stock. Traders may want to buy the stock or buy call options. Tickeron's A.I.dvisor looked at 50 instances where the indicator left the oversold zone. In of the 50 cases the stock moved higher in the following days. This puts the odds of a move higher at over .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on May 26, 2023. You may want to consider a long position or call options on CMG as a result. In of 66 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where CMG advanced for three days, in of 352 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 333 cases where CMG Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for CMG moved out of overbought territory on May 23, 2023. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 49 similar instances where the indicator moved out of overbought territory. In of the 49 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Moving Average Convergence Divergence Histogram (MACD) for CMG turned negative on May 12, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 51 similar instances when the indicator turned negative. In of the 51 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where CMG declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
CMG broke above its upper Bollinger Band on May 18, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 84, placing this stock better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. CMG’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (23.148) is normal, around the industry mean (8.612). P/E Ratio (56.497) is within average values for comparable stocks, (162.857). Projected Growth (PEG Ratio) (2.071) is also within normal values, averaging (2.085). CMG has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.032). P/S Ratio (6.477) is also within normal values, averaging (50.693).
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
an operator of fast-casual, fresh Mexican food restaurants
Industry Restaurants
CMG and
Correlation & Price change
A.I.dvisor indicates that over the last year, CMG has been loosely correlated with FRSH. These tickers have moved in lockstep 61% of the time. This A.I.-generated data suggests there is some statistical probability that if CMG jumps, then FRSH could also see price increases.
| Ticker / NAME | Correlation To CMG | 1D Price Change % | ||
|---|---|---|---|---|
| CMG | 100% | +0.28% | ||
| FRSH - CMG | 61% Loosely correlated | -1.78% | ||
| DRI - CMG | 58% Loosely correlated | +2.02% | ||
| CNNE - CMG | 53% Loosely correlated | +1.32% | ||
| SBUX - CMG | 52% Loosely correlated | -0.12% | ||
| CAKE - CMG | 52% Loosely correlated | +0.51% | ||
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