NEW YORK (TheStreet) -- Shares of Chipotle Mexican Grill (CMG) are higher by 2.71% to $602.46 in late afternoon trading on Wednesday as the stock reacts positively to a price target increase to $560 from $542 at Wunderlich Securities.
The increase reflects the firm's belief that Chipotle is fairly valued and "that the company has virtually completed its roll out of higher menu prices, sooner that we projected," Wunderlich said.
As a result, Wunderlich is now saying its expects Chipotle's second quarter same store sales to increase by 11%, up from the 8% it estimated previously, and its EPS to rise to $3.10, above the consensus estimate of $3.07, and the firm's previous forecast of $3.01.
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TheStreet Ratings team rates CHIPOTLE MEXICAN GRILL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHIPOTLE MEXICAN GRILL INC (CMG) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 24.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 62.05% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- CHIPOTLE MEXICAN GRILL INC has improved earnings per share by 7.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHIPOTLE MEXICAN GRILL INC increased its bottom line by earning $10.46 versus $8.75 in the prior year. This year, the market expects an improvement in earnings ($12.65 versus $10.46).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 8.5% when compared to the same quarter one year prior, going from $76.58 million to $83.07 million.
- Net operating cash flow has increased to $179.78 million or 43.53% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.05%.
- You can view the full analysis from the report here: CMG Ratings Report