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CMG STOCK WRITE UP


CMG (CHIPOTLE MEXICAN GRILL, INC)

  • P/E: 122
  • GAAP DILUTED YEAR-OVER-YEAR EPS GROWTH LAST QUARTER: $2.48
  • SECTOR: CONSUMER SERVICES
  • ASSETS-LIABILITIES: 3
  • DIVIDEND: none

CMG is the ticker for Chipotle Mexican Grill, incorporated. The company's share price has fallen substantially from its all-time highs, due in part to a disease outbreak at its stores, and is up 5% in 2017. The company's share price dropped substantially 7/11/17, and it will report again 7/26/17.
Chipotle posted substantial gains last quarter on a year-over-year basis, rising from a loss of $.88 to a profit of $1.6 per share. Revenue increased by about 33%. Chipotle supplemented the revenue gains by cutting its “other operating costs” about 10%, increasing its “general and administrative expenses” only 10%, and decreasing the number of outstanding shares by about 3 %. Cash increased approximately 30%, while liabilities increased about 5%.
Steve Ellis, who founded the company in 1993, is still its CEO. He was formerly a chef. Chipotle hit its all-time high in 2015 at over $600 per share, and is now trading at just under $400. In late October 2015, an implication of a link between Chipotle foods and an e coli outbreak helped to send the company's share price, and revenues, tumbling lower. Testing did not identify a direct source of the outbreak in Chipotle foods, but many of the victims of the illness ate the same items at Chipotle. The center for disease control advises that it is difficult to determine the exact source of an outbreak when items are mixed together. Chipotle took full responsibility for the outbreak, and Steve Ellis wrote an open letter to customers available on the website which boasts supply chain and policy modifications to prevent future occurrences. The lowest point for Chipotle was the comparable quarter utilized for comparison in this article, with revenue dipping to approximately $834.5 million. Revenues still have not recovered to the level of the comparable quarter of 2015 in 2017, off by just 2%.
CMG does not have a dividend, and trades at a substantial premium in comparison to its competitors in the sector based on price-to-earnings multiple. However, CMG's sales are nearing the levels reached at its stock price's all-time high. CMG is up 5% year-to-date in 2017, and fell almost 3% 7/11/17. When it reports 7/26/17, Chipotle will look to beat earnings estimates, and demonstrate it has progressed from the e coli scare.

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