Chipotle Stock Climbs on Strong Q1 Earnings—Monitor This Important Price Level

Chipotle Mexican Grill (CMG) served up quarterly earnings and revenue that came in ahead of market expectations, sending the fast casual restaurant chain’s shares more than 3% higher in premarket trading Thursday morning.

For the three month period ending March 31, the Newport Beach, California-based company posted adjusted earnings of $13.37 per share, handily above the $11.68-a-share figure expected by analysts. Revenue in the period of $2.7 billion increased 14.1% from a year earlier and also topped estimates, which Wall Street had forecast at $2.68 billion.

The burrito maker, which added 47 new locations in the first quarter, reported same store sales growth in the period of 7%, helped by a 5.4% year-over-year (YOY) jump in transaction volume. Chipotle said it expects 2024 same-store sales growth in the “mid- to high-single-digit range.

Chipotle CEO Brian Niccol told analysts on the earnings call that Chipotle saw growth across all income groups during the quarter, adding that the fast-casual chain may be benefiting from full-service restaurant customers who are seeking more affordable dining options. “From low to middle to higher-income consumers, we’re just seeing gains with all income cohort,” he said.

The company also said it raised menu prices in its Californian restaurants by around 6% to 7% earlier this month to help offset the state’s mandated minimum wage increase to $20 for fast-food workers, noting that the price hikes had not yet led to a change in consumer behavior.

After finding support at the 200-day moving average in October last year, the Chipotle share price has trended sharply higher. However, since late March, the stock has consolidated within a narrow 5% channel, potentially indicating accumulation by institutional investors leading into the company’s quarterly results.

Looking ahead, monitor if earnings-driven momentum can act as a catalyst for a breakout above the channel’s top trendline sitting at the key $3,000 level. A close above this closely-watched round number would likely lead to a resumption of the stock’s longer-term uptrend.

Chipotle shares were up 3.4% at $3,025 at around 7:00 a.m. ET. The stock has gained more than 60% over the past 12 months.

The company announced last month that it will seek shareholder approval for a 50-for-1 stock split at its annual meeting on June 6.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.