Updated from 12:47 p.m. ET to afternoon market action and additional data throughout.
NEW YORK ( TheStreet) -- Shares of Chipotle Mexican Grill (CMG) have quietly regained the ground lost since David Einhorn of Greenlight Capital detailed a bet against the company, and upcoming earnings will provide insight into how the Denver-based restaurant chain's stock will perform in 2013.
Chipotle faces a high bar on year-over-year earnings and same-store comparisons and pressure on margins from commodity price inflation, but if the company can prove to investors that it still has high growth prospects, the short trades could eventually unravel.
The company's shares are up over 15% this year, outperforming the S&P 500 Index. Chipotle recently breached a $319.87 share price prior to Einhorn's presentation, indicating the stock may have already bottomed amid already apparent earnings headwinds and negative publicity.Still, with the stock trading at forward multiples of about 30 times earnings and a short interest of roughly 13%, Chipotle investors remain vulnerable to disappointments such as the company's third quarter earnings, which sent the company tumbling to multi-year lows in October. After posting 50%-plus stock gains in 2009, 2010 and 2011, Chipotle's shares fell nearly 20% in 2012, as some like David Einhorn bet the company's best days of growth, earnings and brand were behind it. Einhorn believes Chipotle is a run-on-the-mill fast food chain in the eyes of consumers, meaning margins and growth at the company will fall amid competition from price competitors such as Taco Bell, owned by Yum! Brands (YUM) and Qdoba Mexican Grill. "In presenting our short thesis on
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV