Restaurant chain Chipotle Mexican Grill (NYSE: CMG) capped an amazing run up in its share price this year with a 50-for-1 stock split in June. It was one of the largest stock splits in the history of the New York Stock Exchange.
Explaining why the company did it, CFO Jack Hartung said, “We believe the stock split will make our stock more accessible to our employees as well as a broader range of investors.”
With its historic stock split complete, is now the time to invest in Chipotle? Here’s a look into the company to answer that question.
Chipotle’s sales success
Chipotle’s share price has already increased substantially over the past several months, nearly doubling from a 52-week low of $35.37 last October to a high of $69.26 in June. This is a testament to the company’s outstanding financial performance.
In 2023, Chipotle generated $9.9 billion in revenue, a 14% jump from 2022’s $8.6 billion. In addition, its net income increased a whopping 37% year over year to $1.2 billion. These results propelled Chipotle’s 2023 diluted earnings per share (EPS) to $44.34, a 38% increase from the prior-year’s $32.04.
Last year’s success continued into 2024. Its first-quarter revenue reached $2.7 billion, representing 14% year-over-year growth, while net income rose 23% to $359.3 million from 2023’s $291.6 million. Chipotle’s Q1 EPS rose 24% year over year to $13.01.
To put this performance into context, competitor Yum! Brands, owner of multiple restaurant chains including Pizza Hut and Taco Bell, posted $1.6 billion in sales, $314 million in net income, and an EPS of $1.10 in Q1. Yum! Brands is an interesting rival to compare to because Chipotle’s CEO, Brian Niccol, was once the CEO of Taco Bell.
Chipotle’s sales strategy
Niccol, who took over the CEO spot in 2018, summarized the strategy used to produce Chipotle’s excellent financial results when he said, “Our strong sales trends were fueled by our focus on improving throughput in our restaurants.”
This strategy helped Chipotle’s Q1 sales in its existing stores achieve a 7% year-over-year increase. Growth in same-store sales is…
..
