Chipotle Mexican Grill stock has surged around 4% today, and The Country Caller explains why

Published By: Eunice Gettys on January 10, 2017 01:04 pm EST

Chipotle Mexican Grill, Inc. (NYSE:CMG) stock is trading at $417.18, up about 5.55% as of 12:00 PM EST today. The surge in the restaurant’s stock price comes after the company’s announcement regarding “disappointing” comparable sales along with Earnings per Share (EPS) guidance for the fourth quarter.

In today’s press release, the fast-casual restaurant operator reported a drop in same store sales of about 4.8%. On the other hand, the Wall Street analysts’ consensus estimate suggests EPS of 96 cents. In addition to this, the management at Chipotle expects a restaurant-level operating margin of 13% to 14% for the fourth quarter.

Following the preliminary announcement for fourth quarter, Chipotle stock tanked about 4% to $381 during the pre-market trading hours today. But the losses were reversed for the investors, when investment firm Wedbush’s analyst Nick Setyan said that the December 2016 comparable sales were up about 14.7%. This would imply that the first quarter of the current year (1QFY17) comps could be actually ahead of the consensus estimate of 13%, explaining how the company can beat the estimates for Q1 EPS.

Besides this, the restaurant chain said that it will be augmenting its share buy-back program by $100 million, which brings the total of $2.1 billion, of which, $200 million still remains. Buckingham Research’s analyst John Zolidis also issued a research note today, reiterating his Buy rating on the stock accompanied by a 12-month price target of $547.

Mr. Zolidis said: “We believe CMG is starting to feel momentum swing favorably and our sense is that the company is getting its arms around execution related challenges.” Chipotle stock currently trades between a 52-week price range of $352.96 and $542.50. The stock has a total market capitalization of $11.97 billion, along with an average trading volume of 1.11 million shares per day.