On Thursday, Loop Capital adjusted its outlook on Chipotle Mexican Grill (NYSE:CMG) stock, reducing the price target to $53.00 from the previous $58.00, while keeping a Hold rating on the stock.
This revision follows Chipotle's second-quarter earnings report, which revealed an earnings per share (EPS) of $0.34, surpassing both Loop Capital's estimate of $0.31 and the consensus of $0.32.
The company experienced a notable 11.1% increase in comparable sales during the second quarter, outperforming Loop Capital's growth projection of 8.5% and the consensus estimate of 9.2%. This growth included an 8.7% rise in transactions and a 2.4% increase in the average check amount.
Chipotle's consolidated revenues for the second quarter stood at $3.0 billion, marking an 18.2% year-over-year increase. These figures slightly exceeded Loop Capital's forecast of $2.9 billion and the consensus of $2.94 billion.
The decision to maintain the Hold rating while lowering the price target from $58 to $53 reflects a valuation based on approximately 28 times the estimated 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). This is a change from the previous valuation, which was based on around 35 times the estimated 2024 EV/EBITDA.
InvestingPro Insights
Following the assessment by Loop Capital, it's worth noting that Chipotle Mexican Grill (NYSE:CMG) has been the subject of upward earnings revisions by analysts for the upcoming period, according to InvestingPro Tips. This optimism is echoed by the company's robust revenue growth of 13.61% over the last twelve months as of Q1 2023. Additionally, Chipotle's strong gross profit margin of 40.88% indicates effective cost management relative to revenue.
InvestingPro Data highlights that Chipotle is trading at a high Price / Book multiple of 21.16, with a market capitalization of $71.11 billion. The P/E ratio stands at 55.15, which is considered high, suggesting that the market has high expectations for the company's future earnings. Despite recent price volatility, with a 1-month total return of -21.14%, the company's long-term performance shows a 1-year total return of 23.74%, reflecting its resilience.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available for Chipotle, including insights into the company's debt levels, liquidity, and valuation multiples. These can provide a more comprehensive understanding of CMG's financial health and future prospects. To explore these insights and make informed investment decisions, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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