Why Is Chipotle Stock So High — and Can It Continue Its Stratospheric Run?

Key takeaways

• Fast-food Mexican chain Chipotle has dazzled the markets this year with its growth
• The latest quarterly earnings report was also stellar
• Chipotle stock has grown nearly 300% in five years, with more growth on the horizon

Move out of the way, Cava Group — another fast-food restaurant chain has had investors abuzz all year. Mexican fast food favorite Chipotle has quietly notched up some serious gains this year, with no end in sight to the share price rise.

As the stock keeps climbing, it’s natural to wonder how Chipotle got here in the first place — and whether there’s still room for the stock to grow. We’ve got an analysis below of Chipotle’s growth and whether it’s the end of the road or just the beginning. Keep reading.

What’s happening with Chipotle stock?

Chipotle is a genuinely spicy stock for investors to have in their portfolios. The share price is currently $1,938.60, a 41.77% increase this year so far. It’s not just a one-off, either. Chipotle stock has increased a massive 296% in five years.

Chipotle stock hit an all-time high of $2,152 on July 18 before suffering, along with the rest of the stock market, a decline throughout most of August. Based on Chipotle’s figures, though, we’d imagine the restaurant chain still has room to grow.

Chipotle’s latest earnings beat

The Mexican restaurant chain’s latest quarterly earnings report gives us some insight into why the stock is so hot right now. Even though Chipotle missed consensus revenue expectations, arriving at $2.5 billion, that’s still a 13.6% increase from the same time last year.

The report only got better from there. Adjusted earnings per share arrived at $12.65, far outpacing analyst expectations. Chipotle’s same-store sales increased by 7.4%, with the company estimating it will increase sales from the mid-to-high single-digit range for the full-year estimate.

Chipotle’s operating margin has repeatedly impressed Wall Street, with the latest quarter showing a 17.2% gain. That’s significantly higher than the year-ago percentage.

The case for Chipotle’s growth

The growth prospects for Chipotle are pretty insane, too. In the short term, the third quarter projections are promising but hold some headwinds in operating costs and ingredient price increases. But Chipotle stock is one to hold for the long term.

Between 2016 and 2022, Chipotle expanded its restaurant footprint by 6% yearly. CEO Brian Nicol wants to have 7,000 North American stores open in the long term, which is roughly double the current physical footprint.

Chipotle’s revenue has also doubled from $3.9 billion to $8.6 billion in the same period. With massive potential in overseas markets like the U.K., Europe and the Middle East, it’s no wonder investors are so excited about Chipotle’s potential.

The bottom line

Chipotle stock has some sizzling prospects for Wall Street to look forward to. With solid earnings, previous growth and a plan to take the fast food restaurant chain to the next level, we’d be surprised if we don’t see Chipotle surpass its July 18 stock price record in the near future.