Just before its 'Boorito' reappears on Halloween, Chipotle Mexican Grill will release third-quarter earnings on Oct. 29. And as Wall Street awaits an earnings-season trick or treat, Chipotle stock looks to spice up a new breakout and join in on recent big runs by Cava Group and Texas Roadhouse.
Chipotle has found a spot on the IBD Breakout Stocks Index. It's also clear that Wall Street has a taste for Chipotle stock.
Top Funds Show Demand For Chipotle Stock
While the restaurant chain did not join Wingstop and Cheesecake Factory on this month's list of new buys by the best mutual funds, 170 funds with an A+ rating from IBD own shares of Chipotle stock. By comparison, 35 such funds have a position in Texas Roadhouse while 25 own shares of Cava stock.
One ingredient driving demand for Chipotle is the company's solid and steady growth.
In keeping with its Halloween tradition, Chipotle will bring back the Boorito as an in-restaurant celebration with a discounted entree offer for Chipotle Rewards members in costume on Oct. 31. In a first for the company, Chipotle is expanding the Boorito to the United Kingdom and France.
Sales growth has ranged from 11% to 18% over the last eight quarters. In July, Chipotle reported second-quarter revenue of $2.97 billion. Earnings rose 36% to 34 cents per share. That marked a third-straight quarter of acceleration.
For the third quarter, analysts expect Chipotle to post 14% revenue growth to $2.82 billion and 10% earnings growth to 25 cents per share. For the full year, Wall Street forecasts earnings growth of 22% to $1.09 a share. Estimates for 2025 call for a 19% earnings increase to $1.30 a share.
With a 96 Composite Rating, Chipotle trails only Cava and ties Texas Roadhouse within the restaurant group. Other leaders include Shake Shack and Cheesecake Factory.
See Who Joins Chipotle The IBD Breakout Stocks Index
New Hiring Platform Uses AI
Looking to support accelerated growth, Chipotle just introduced "Ava Cado," a new hiring platform using artificial intelligence.
In partnership with Paradox, Chipotle says the AI-driven platform will make hiring employees more efficient for its restaurant teams. One goal of using Paradox's conversational hiring system is to reduce the amount of time Chipotle's managers spend on administrative tasks, such as collecting basic information from candidates and scheduling interviews.
With the technology, underpinned by Conversational AI, Chipotle hopes to cut the amount of time it takes to hire an employee for an in-restaurant position by as much as 75%.
Chipotle Stock Prepares Potential Breakout
While Cava soars to record highs and Texas Roadhouse taste-tests a new buy zone, Chipotle stock continues to marinate a new buy point — with signs of renewed technical strength.
Chipotle currently trades 15% below the conventional 69.26 entry in a cup pattern. But the stock may form a handle to offer an earlier buy point.
While the relative strength line still needs some shoring up, investors should note recent positive developments in the chart for Chipotle stock.
The 21-day exponential moving average climbed back above the 50-day line. When a shorter-term moving average gets back above a long-term benchmark, it points to rising strength. Furthering that point, also note how the 50-day moving average has been on the upswing and stands poised to retake the 200-day line.
So while Halloween may spook the kids, Chipotle stock investors may be in for a treat if the company can build on its momentum with a strong report on Oct. 29.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
