why to sell chipotle stock

4 Reasons to Sell Chipotle Stock While It Still Is Riding High

• Too Far, Too Fast. Broadly speaking, CMG has simply come too far, too fast. The stock has nearly tripled over the past...
• Valuation Friction. I follow a lot of stocks, and Chipotle is now close to being the most richly valued restaurant stock...
• Economic Slowdown and Chipotle Stock. Although stocks are...

Full Answer

Is it too late to buy Chipotle stock?

While the shares have done well, Regan said Chipotle is still in a recovery phase, so it isn’t too much of a stretch to think that still more upside can exist. The chain continues to open stores and increase sales at those already operating. Valuation has been one of the biggest knocks against the stock throughout its rally.

Should I invest in Chipotle stock?

Should You Invest in Chipotle Mexican Grill Stock? The past few years, and even this past quarter, have been amazing for Chipotle. However, given the cost investors must pay for this growth, might ...

Should you buy the dip in Chipotle stock?

[4/4/2021] Should You Buy The Dip In DoorDash Stock? DoorDash stock has declined ... more valuable than major restaurants including Chipotle and Yum Brands. Is this valuation justified?

Does Chipotle make money?

Yes, Folks, Chipotle Makes Money. Okay, so does Chipotle make money? The answer to that question is definitely yes; it just does not make nearly enough money to justify that $650 stock price. The financial numbers indicate that Chipotle’s business model is certainly profitable although not necessarily for investors.

Why to buy Chipotle stock?

Key Points Chipotle is performing well despite higher supply-chain costs. The company's digital business is fueling improvement in its profit margin. Management still sees plenty of opportunity to open more restaurants.

Why is Chipotle stock so valuable?

Chipotle has always had a knack for growth, despite operating in a market with heavy competition. While other restaurants large and small struggled to adapt to the coronavirus lockdown, Chipotle was already in the right place at the right time to properly serve a need for sanitary food.

Is Chipotle stock good to buy?

Chipotle is a high-quality business ... From 2016 to 2021, revenue increased at an annualized rate of 14%. Same-store sales growth averaged 8.5% per year, while the store count increased from 2,250 to about 2,950 over the same period. And net income surged from a low of $23 million in 2016 to $653 million last year.

Is Chipotle a good long term stock?

According to financial forecasts sourced from S&P Capital IQ, Chipotle's revenue growth is expected to come down from +26.1% in FY 2021 to +14.9% in FY 2022. The company's adjusted earnings per share growth is expected to normalize from +136.9% last year to +23.8% this year.

Is Chipotle stock undervalued?

At this time, the firm appears to be undervalued. Our model approximates the value of Chipotle Mexican Grill from analyzing the firm fundamentals such as Current Valuation of 43.4 B, profit margin of 8.74 %, and Return On Equity of 32.34 % as well as examining its technical indicators and Probability Of Bankruptcy.

Is Chipotle a profitable company?

Net income for 2021 was $653.0 million, or $22.90 per diluted share, compared to net income of $355.8 million, or $12.52 per diluted share for 2020.

Is Chipotle a buy or sell?

Is Chipotle Stock A Fair Valuation? Wall Street analysts are very bullish on the stock with an average rating of 4.27 out of 5. The average price target of $1,898 represents 29% potential upside.

Is Chipotle a Buy Sell or Hold?

Chipotle Mexican Grill has received a consensus rating of Moderate Buy. The company's average rating score is 2.81, and is based on 23 buy ratings, 7 hold ratings, and no sell ratings.

Does McDonald's own Chipotle?

While the Golden Arches initially took only a minority stake, by the time Chipotle went public in 2006, McDonald's owned more than 90% of the company. McDonald's no longer owns any shares of Chipotle (something it must also now regret), but the impact on Ells' ownership stake was permanent.

Why did Chipotle stock rise today?

Chipotle Mexican Grill said earnings for the current quarter are likely to be hurt by the Omicron variant of Covid-19. Share of Chipotle CMG +4.59% jumped nearly 7% in after-hours trading after the fast-food chain reported higher-than-expected earnings for the latest quarter.

What is CMG price target?

Stock Price Target CMGHigh$2,500.00Median$1,875.00Low$1,335.00Average$1,856.32Current Price$1,306.80

This investor thinks it's a great time to take some of his chips off the table

Brian Feroldi has been covering the healthcare and technology industries for The Motley Fool since 2015. Brian's investing strategy is to buy high-quality companies and then let compounding work its magic. See all of his articles here. Follow @brianferoldi

1. Big catalysts are in the rearview mirror

Chipotle's stock has been a rocket ship ever since Brian Niccol was brought in as the new CEO .

2. Future optionality is gone

A lot of my bullishness for Chipotle used to hinge on former CEO Steve Ells' belief that the company's model could be applied to other types of food.

3. The price is right

Chipotle's stock has been a monster winner over the past year. With shares currently hovering around $700, the stock is trading for 45 times next year's earnings estimates. I think that valuation is pricing in a lot of good news.

4. Better places for the money

Figuring out when to sell a stock is always hard. However, since Chipotle currently accounts for more than 4% of my portfolio and I've got other stocks that I'd like to buy, I think that trimming some of my position makes sense.

I'm still a bull

I want to stress that I'm still optimistic about Chipotle's stock moving forward. I'm hopeful that the company's recent actions will continue to drive same-store sales growth and operating leverage that will lead to outsize gains on the bottom line. That's why my plan is to just trim my position, not exit it completely.

Valuation Friction

I follow a lot of stocks, and Chipotle is now close to being the most richly valued restaurant stock I’ve ever seen that isn’t growing revenues at a 20%-plus rate.

Economic Slowdown and Chipotle Stock

Although stocks are rallying to all time highs, the economy is still slowing, U.S. consumer sentiment is still below where it was for most of 2018, and sales across the restaurant industry haven’t been all that great to start 2019.

Mysterious E. coli Outbreak

To be clear, there has been an E. coli outbreak in the United States, a source has not been identified, and Chipotle hasn’t been mentioned by any reports. It’s also highly unlikely that Chipotle is the source of this outbreak.

CMG Stock: Pros

Excellent Historical Performance : It's easy to discredit Chipotle due to its recent struggles. But that would unfairly lose sight of the company's outstanding performance over the past decade and longer. For the past 10 years, revenues have grown at 21% a year compounded. That's outstanding!

CMG Stock: Cons

The Food Safety Scandal : All the pros are good and well, but we can't avoid the elephant in the room. CMG stock has fallen for one main reason: people are scared to eat at their restaurants. The company has had an ongoing series of food safety events where customers or employees have gotten ill.

Chipotle Stock: Verdict

There's too many unknowns to buy CMG stock with confidence. The company has done great in the past. However, the ongoing food safety crisis is a company-defining event. And it's simply too early to tell if Chipotle will come through this scandal with its soul and reputation intact.