Should Investors Buy Into the Chipotle Turnaround?
Key PointsChipotle delivered its third consecutive quarter of comparable-store sales growth.
Chipotle Mexican Grill (CMG) has demonstrated a positive turnaround with three consecutive quarters of rising comparable-store sales. Despite this, the stock remains down more than 15% this year. The company's same-store sales growth has been solid since the onset of 2026, with modest increases each quarter. However, a slowdown in October suggests the momentum may be waning.
Despite this, Chipotle anticipates a rebound in fourth-quarter sales growth, driven by marketing efforts and the launch of its brisket limited-time offering in November. Revenue for the quarter reached $3.29 billion, with adjusted EPS dropping 7% to $0.27, aligning with analyst expectations. However, the company's restaurant-level operating margin decreased by 120 basis points to 23.3%.
To address this, Chipotle plans to raise prices by 3% in Q4. The company has also expanded internationally, opening 84 company-owned locations in the U.S., plus five in Mexico, Saudi Arabia, and South Korea. Looking ahead, Chipotle plans to add 350-370 new restaurants in 2026, including international locations. While the company shows signs of recovery, high inflation and slow sales growth are hindering profitability.
With a forward P/E multiple of 23 times 2027 estimates, Chipotle appears reasonably valued. However, potential investors may want to wait for further execution before jumping on the recent rally.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
