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Sergey Savastiouk's Avatar
published in Blogs
Jun 03, 2019

Chipotle (CMG, $645.67) warns of $15 million cost spike and upto 30 bps margin decline, should tariffs on Mexican imports get implemented

Chipotle Mexican Grill feels that tariffs on Mexican imports could raise costs and squeeze margins.

The chain of fast casual restaurants told CNBC that if U.S. President Donald Trump’s proposed tariffs on goods imported from Mexico gets implemented, the company’s costs could increase by $15 million in 2019, while its margins could get slashed by 20 to 30 basis points.

CFO Jack Hartung mentioned in a statement that Chipotle might consider covering the higher costs through a “modest” price hike on their items, among other potential solutions - should the tariffs become permanent.

Hartung emphasized that the company is committed to its “integrity principles”.  He indicated that while premashed or processed avocados would probably be cheaper, the company would continue to use fresh ingredients as it is unwilling to short-change customers on quality and taste.

The tariffs on Mexican imports could gradually increase and could potentially get to as high as 25% this year, if Trump ends up implementing his plan.

Related Ticker: CMG

Aroon Indicator for CMG shows an upward move is likely

CMG's Aroon Indicator triggered a bullish signal on May 21, 2024. Tickeron's A.I.dvisor detected that the AroonUp green line is above 70 while the AroonDown red line is below 30. When the up indicator moves above 70 and the down indicator remains below 30, it is a sign that the stock could be setting up for a bullish move. Traders may want to buy the stock or look to buy calls options. A.I.dvisor looked at 363 similar instances where the Aroon Indicator showed a similar pattern. In of the 363 cases, the stock moved higher in the days that followed. This puts the odds of a move higher at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 2 days, which means it's wise to expect a price bounce in the near future.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where CMG advanced for three days, in of 353 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The 10-day RSI Indicator for CMG moved out of overbought territory on May 13, 2024. 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 53 similar instances where the indicator moved out of overbought territory. In of the 53 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Momentum Indicator moved below the 0 level on May 20, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on CMG as a result. In of 68 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

The Moving Average Convergence Divergence Histogram (MACD) for CMG turned negative on May 14, 2024. 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 47 similar instances when the indicator turned negative. In of the 47 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 April 25, 2024. 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)

Fear & Greed

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 85, 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 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: CMG's P/B Ratio (25.773) is very high in comparison to the industry average of (4.072). P/E Ratio (67.271) is within average values for comparable stocks, (50.416). Projected Growth (PEG Ratio) (2.721) is also within normal values, averaging (1.958). CMG has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.037). P/S Ratio (8.547) is also within normal values, averaging (3.228).

Notable companies

The most notable companies in this group are McDonald's Corp (NYSE:MCD), Starbucks Corp (NASDAQ:SBUX), Chipotle Mexican Grill (NYSE:CMG), Yum! Brands (NYSE:YUM), Darden Restaurants (NYSE:DRI), Domino's Pizza (NYSE:DPZ), Yum China Holdings (NYSE:YUMC), Shake Shack (NYSE:SHAK), Noodles & Company (NASDAQ:NDLS).

Industry description

The industry includes companies that operate full-service restaurants, fast food restaurants, cafeterias and snack bars. McDonald`s Corporation, Starbucks Corporation, YUM! Brands, Inc. and Restaurant Brands International Inc. are some of the largest U.S. restaurant-owning companies in terms of market capitalization. While restaurant spending could be viewed as discretionary for consumers, some companies in the business have been able to weather economic cycles by establishing strong loyalty among customers over the years. Many of them also have a strong global presence as well.

Market Cap

The average market capitalization across the Restaurants Industry is 7.24B. The market cap for tickers in the group ranges from 6.73K to 186.02B. MCD holds the highest valuation in this group at 186.02B. The lowest valued company is AMHG at 6.73K.

High and low price notable news

The average weekly price growth across all stocks in the Restaurants Industry was -3%. For the same Industry, the average monthly price growth was 0%, and the average quarterly price growth was 3%. ODDAF experienced the highest price growth at 20%, while WBBAD experienced the biggest fall at -41%.

Volume

The average weekly volume growth across all stocks in the Restaurants Industry was 17%. For the same stocks of the Industry, the average monthly volume growth was 57% and the average quarterly volume growth was 192%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 45
P/E Growth Rating: 66
Price Growth Rating: 62
SMR Rating: 65
Profit Risk Rating: 85
Seasonality Score: 18 (-100 ... +100)
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A.I.Advisor
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A.I. Advisor
published General Information

General Information

an operator of fast-casual, fresh Mexican food restaurants

Industry Restaurants

Profile
Fundamentals
Details
Industry
Restaurants
Address
610 Newport Center Drive
Phone
+1 949 524-4000
Employees
116068
Web
https://www.chipotle.com
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