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Chipotle's (NYSE: CMG) stock closed at a record high of $68.55 per share on June 18, 2024. At the time, investors were impressed by the fast-casual restaurant chain's robust comparable-store sales growth, ongoing expansion, and rising restaurant-level operating margins.
But today, it trades at about $35. It pulled back as its comps growth cooled down and its margins shrank. The abrupt departure of its CEO, Brian Niccol, who left in Aug. 2024 to become CEO of Starbucks, exacerbated the selling pressure.
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Yet over the past 12 months, Chipotle bought back $2.2 billion in shares. In its latest quarter, it repurchased $110 million in shares at an average purchase price of $34.05 per share. That's just barely below its current trading price -- so is it worth accumulating right now?
In 2024, Chipotle's comps rose 7.4%, and its restaurant-level margin rose 50 basis points to 26.7%. But in 2025, its comps declined 1.7% as its restaurant-level margin fell to 25.4%. It expanded its year-end restaurant count from 3,726 to 4,042 locations.
Chipotle attributed its slowdown to tougher competition and inflation, which drove up its food and labor costs while limiting its price elasticity. Its ongoing store openings were also risky -- since its new locations could throttle its comps growth if they didn't grow after the first year.
Over the past year, Chipotle's comps growth stabilized, even as it continued to open new stores. However, inflation is squeezing its restaurant-level operating margins.
For the full year, Chipotle expects its comps to grow by the low single digits as it opens 350-370 new restaurants. Analysts expect its revenue to grow 9% as its adjusted EPS dips 7%.
For 2027, they expect its revenue and adjusted EPS to rise by 11% and 22%, respectively, as inflation cools. It aims to open 340 to 360 new company-owned restaurants in the U.S. and Canada next year, with most of those locations using Chipotlanes to accelerate orders.
At $35, Chipotle's stock trades at 27 times next year's earnings. It isn't a screaming bargain, but its downside could be limited if its growth accelerates again in 2027. It also still has $1.57 billion in buybacks remaining in its current authorization. Therefore, buying Chipotle's stock today could be a smart move if you expect its business to recover over the next few years.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends the following options: short December 2026 $38 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
Chipotle Bought Back Stock at $34.05 a Share Last Quarter. Is It Still a Buy Today? was originally published by The Motley Fool
