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Chipotle Mexican Grill, Inc (CMG)

Sep 22 2010

Chipotle Mexican Grill, Inc (CMG)

Chipotle Mexican Grill is the owner and operator of fast food casual restaurants in the US and Canada. The company was founded in 1993 and currently operates 1,000 restaurants. The stock of the company is in the S&P 400 MidCap Index is has a market-cap of $5.16 Billion. The company has not yet offered a dividend to investors but boast solid growth.

The company is set to announce their current quarter profit on October 21st. While the stock has hit two new 52 week highs during the month of September, $169.18 on September 13th and $171.46 on September 21st. The company has beat the past four earnings estimates with the most recent report coming in at $1.46 a share in profit versus an estimate of $1.39 a share.

Current estimates have been raised from $1.25 a share to $1.29 a share over the past 60 days. And yearly estimates of profit have also improved from $4.97 a share to $5.11 a share over the same period. Not surprisingly, the stock has also moved higher during this time period from $133.97 to $168.31 today.

The current price to earnings (P/E) ratio is 35.12 on 31% earnings growth, year over year. This translates into a PEG just slightly greater than 1. Sales have also grown recently with 20% year over year growth. The current quarter is expected to show 22.70% revenue growth over the same quarter last year.

The Motley Fool has recently reported the growth that Chipotle has been able to achieve is in part due to a new smaller store format. In a similar way to large retailers like Wal-Mart, Target and Whole Foods Market, Chipotle has rolled out smaller stores which allow it to reach new markets. The smaller stores allow for more penetration into American urban areas.

The stock has a similar amount of option activity to other S&P 400 MidCap stocks. The front month has a decent amount of liquidity if you have to trade to options. But the chart trend is solid in the green for the entire month of September bordering overbought at times. If the stock pulls back to $155 a share and the earnings continue to have increasing estimates, owning before the earnings announcement should work well.

Chipotle Mexican Grill CMG© 2010

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