$CMG (+5.46%)
The restaurant operator Chipotle Mexican Grill was one of the outperformers on the market in 2024. Recently, however, the shares of the restaurant chain operator have fared less well on the stock market.
Chipotle remains on course for growth
- Despite recent losses, the majority of analysts remain optimistic
- Inflation, tariffs and CEO change as risk factors
Chipotle Mexican Grill's shares gained around 35% on the NYSE in 2024. Although the company was unable to keep up with the massive share price gains that some tea stocks have enjoyed, it still outperformed the broader market.
Disappointing sales forecast vs. business outlook
In the new year, however, things have been rather mixed on the stock market: the share price has fallen by more than six percent since the beginning of the year, with a disappointing sales outlook being one of the factors that put investors off and caused the share price to fall.
However, Chipotle has recorded continuous growth and is also operating profitably: in 2024, the company's bottom line was 1.5 billion dollars - reason enough to take a closer look at the share in terms of its suitability as a value investment. After all, strong business performance in the past can be an indicator that this will continue in the future.
There have been no major sales actions by insiders in the past, which speaks for the management's confidence in the share. In addition, Chipotle has apparently found potential applications for the use of artificial intelligence in its restaurants: They are looking for ways to use the technology to prevent customers from migrating to other options. "When the model detects that a customer's behavior is changing in a certain way that indicates a propensity to churn, we take them on a new journey with personalized extras and offers to encourage them to buy again," Scott Boatwright, Chipotle's new CEO, emphasized in a conference call following the release of the latest quarterly results. "I think these things will lead to significant differentiation in the digital channel," he continued.
Expansion also remains an important cornerstone of Chipotle's future strategy: between 315 and 345 new restaurants are to be added in 2025 alone, which is expected to have a positive impact on sales growth.
Chipotle successfully combats headwind factors
However, Chipotle's business has not been running entirely smoothly recently. The fact that Starbucks poached the CEO of the restaurant chain in the summer of 2024 was not well received by investors, even though Chipotle shares were able to recoup their subsequent losses. However, the new Starbucks CEO Brian Niccol was considered a stroke of luck for Chipotle; under his leadership, the once ailing chain was brought into the digital age. As successor to Chipotle founder Steve Ells, he introduced app ordering - just in time before the outbreak of the coronavirus pandemic. He also drastically revised other existing concepts and expanded the menu to include lifestyle products aimed at appealing to health and nutrition-conscious customers. Despite the economic success and digitalization that Niccol was able to achieve, there was also increasing criticism of the company. The portion sizes in particular caused displeasure among customers and even led to Chipotle being sued by shareholders. The company, which has become increasingly digitalized, was punished on social media - but nevertheless managed to remain on course for growth. The new CEO is therefore unlikely to see any need to deviate from the financially successful company policy of his predecessor.
However, Chipotle cannot completely decouple itself from economic developments. The company is struggling with high inflation - however, the restaurant operator reacted to this with price increases, which were also intended to at least partially compensate for the promised larger portions - and did so. This is because margins rose in 2024 as a whole, while many other restaurant operators had to accept cutbacks in this area.
Burrito vendors are also feeling the effects of the new Trump administration. The punitive tariffs announced against neighboring countries could have an impact on the balance sheet, particularly with regard to imports of avocados from Mexico. Around 50 percent of the fruit is currently imported from the neighboring country, which is why costs in this area could rise. Alternatively, the US company could be forced to switch to other export countries. However, according to the company, the economic consequences should remain manageable: Chipotle expects its distribution costs to rise by 60 basis points, or 0.6 percentage points. Nevertheless, there is likely to be a need for action on this front if Trump's plans for punitive tariffs of 25 percent on Mexican imports, which were initially suspended for a month, are actually implemented.
This is how analysts rate Chipotle shares
Despite possible headwind factors, analysts generally rate the share positively. Of the 24 analysts listed on TipRanks, 18 rate Chipotle shares as a buy, while six experts have issued a hold rating for the stock. The average price target is USD 67.71, which means that the share still has around 19 percent upside potential.
However, it remains to be seen whether it can be classified as a value investment against this background. Star investor Warren Buffett, who is regarded as the grandmaster of value investing, has not yet identified the share as an investment.
https://www.finanzen.net/nachricht/aktien/analysten-optimstisch-chipotle-im-check-value-perle-oder-ueberschaetzte-aktie-14209561
