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.
CMG's RSI Indicator stays in oversold zone for 7 days
The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an uptrend is expected.
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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 6.81B. The market cap for tickers in the group ranges from 6.73K to 181.22B. MCD holds the highest valuation in this group at 181.22B. 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 0%. For the same Industry, the average monthly price growth was -2%, and the average quarterly price growth was -5%. DPCDF experienced the highest price growth at 32%, while ALSSF experienced the biggest fall at -17%.
Volume
The average weekly volume growth across all stocks in the Restaurants Industry was 14%. For the same stocks of the Industry, the average monthly volume growth was 32% and the average quarterly volume growth was 119%
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Valuation Rating: 46
P/E Growth Rating: 64
Price Growth Rating: 64
SMR Rating: 65
Profit Risk Rating: 85
Seasonality Score: 15 (-100 ... +100)