Chipotle stock is the IBD Stock Of The Day for Thursday as it clears a trendline and extends a bounce from key support. Meanwhile, shareholders on Thursday are expected to approve a 50-for-1 stock split.
Chipotle Mexican Grill shareholders greenlit a 50-for-1 stock split at Thursday's annual meeting. The board of directors originally announced the plan on March 19 following its approval.
CMG holders as of June 18 will receive 49 additional shares of Chipotle stock after market close on June 25. Chipotle stock will begin trading at a post-split basis on June 26.
It will be Chipotle's first stock split in its 30-year history and one of the biggest splits in the history of the New York Stock Exchange. The NYSE's last 50-for-1 stock split was Berkshire Hathaway's all the way back in 2010, MarketWatch reported. Previously, Nasdaq-listed Amazon.com completed a 20-for-1 split on June 6, 2022.
Stock splits spread the market value of a company across a greater number of shares, which results in a lower price point for the stock. The total market capitalization of the company remains unchanged after a stock split, but liquidity increases due to the issuance of more shares. A lower share price does make it easier to trade options.
Chipotle Earnings, Outlook
Meanwhile, Chipotle will release second-quarter results on July 24, about a month after the split.
FactSet analysts expect earnings growth to slow slightly after accelerating the last two quarters, with a 23% increase to $15.61 per share. Wall Street estimates sales jump 16% to $2.93 billion.
Chipotle on April 24 cleared Wall Street estimates with a 27% earnings gain while revenue rose 14% to edge out forecasts. Comparable restaurant sales rose 7% during the quarter, driven by a 5.4% increase in transactions. The same-store sales growth beat estimates for a 5.4% increase.
Chipotle guided 2024 comparable restaurant sales growth in the mid- to high-single-digit range, up from its February outlook of mid-single-digit growth. The company says it expects to open 285 to 310 new restaurants during the year, of which over 80% will have a Chipotlane drive-thru.
For the year, FactSet predicts Chipotle earnings to increase 24% to $55.69 per share on 15% sales growth to $11.36 billion.
Chipotle Stock Performance
CMG stock cleared a short trendline Thursday as it continues to bounce off its 50-day moving average and 10-week line, MarketSurge charts show. The pullback to test the 10-week line brought Chipotle stock almost to the top of a prior short consolidation, which wasn't quite long enough for a flat base.
CMG stock is on track to form a flat base with a 3,260 buy point after this week.
IBD added Chipotle stock to SwingTrader as a half position on June 5. CMG shares are trading above the SwingTrader entry of 3,146. The SwingTrader buy zone extends to 3,208.92.
Chipotle stock leads the Retail-Restaurants Group according to the IBD Stock Checkup. The Retail-Restaurants group gained 22.8% this year and ranks 17th out of the 197 industry groups tracked by IBD.
CMG shares have rallied nearly 40% this year as restaurant stocks leapt.
Cava Group stock doubled in 2024, with the fast-casual chain hitting a record high of 96.93 on May 30 following earnings. Cava, sometimes called the "Mediterranean Chipotle," fell nearly 7% Thursday amid some big insider sales.
Wingstop is also trading near all-time highs after soaring more than 50% in 2024. ING stock sank x% after flashing a buy signal Wednesday.
Texas Roadhouse is extended above a flat-base buy zone and advanced nearly 39% this year. Chili's operator Brinker International has trended higher since its April 30 earnings report and is up 67% year to date. Both TXRH and EAT fell slightly on Thursday.
Chipotle stock has a perfect 99 Composite Rating. The Composite Rating combines various technical indicators into one easy-to-read score. CMG has a 98 EPS Rating. Chipotle's relative strength line is off its late April highs but the stock still has a robust 94 RS Rating.
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