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Chipotle shares inch toward $2K as stocks recover

The burrito chain continued its strong performance by hitting another 52-week high as restaurant stocks recover from earlier declines.
Chipotle's stock is inching closer to $2,000 a share, up 500% since 2018./Photograph: Shutterstock

Shares Chipotle Mexican Grill hit a new 52-week high on Thursday, hitting $1,958.44 per share before closing at $1,944, bringing the fast-casual Mexican chain that much closer to $2,000 per share.

The Newport Beach, Calif.-based chain was among the many restaurant companies whose stock prices have more than recovered from a brutal Monday selloff. The vast majority of restaurants were up on Thursday as broader stock indexes rose more than 1%.

The Dow Jones Industrial Average rose more than 500 points on Thursday, up 1.5%, and has fully recovered its losses from Monday, as has the broader S&P 500 Index.

Many restaurant stocks have also recovered. The median stock price increased 2% on Thursday, with all but a half-dozen restaurant companies in positive territory.

Investors put a lot of money into casual dining, thanks largely to a strong earnings report from Olive Garden owner Darden, whose stock hit a new 52-week high and closed up 6% on the day. That appeared to pull up other casual dining companies, which had 10 of the 13 best performing restaurant stocks on Thursday.

Comparatively, Chipotle’s close at just a half-percent wasn’t in that territory, but the company has by far the most expensive stock on a per-share basis. The company’s shares are up 40% this year thanks largely to a remarkably strong recovery, including 18% two-year same-store sales in the second quarter—a result that took its restaurant-level operating profits to its highest level since 2015.

Chipotle’s performance both right before and since the start of the pandemic have helped the company recapture its status as Wall Street’s favorite restaurant.

The company’s stock seemed destined for $1,000 a share and higher before a series of food safety issues detailed its sales and sent it tanking. The stock was trading in the low $300s when Brian Niccol was named CEO in 2018. The shares are up more than 500% since then.

Chipotle also has an enterprise valuation multiple of 45 times earnings before interest, taxes, depreciation and amortization. By comparison, Domino’s valuation is 25x, Starbucks is 22, McDonald’s is 18, Wendy’s 16 and Taco Bell owner Yum Brands’ enterprise valuation multiple is 20, according to data from financial services site Sentieo.

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