NEW YORK (TheStreet) -- Chipotle Mexican Grill (CMG - Get Report) stock is lower by 4.33% to $612.51 in pre-market trading on Monday, as the company closes restaurants in Seattle and Portland, while health officials investigate a reported E. coli outbreak tied to the chain.
The Mexican-style restaurant chain has closed the 43 restaurants that it owns in Washington and Oregon, after three cases of E. coli in Oregon and at least 19 in Washington were linked to eating at the restaurants since October 14, according to a statement by the Oregon Health Authority.
One third of those affected have been hospitalized, but there have been no reported deaths.
Further cases will likely be reported, as many people who might have been infected likely have not yet sought medical care, according to a statement.
E. coli is a bacteria found in the gut, and certain strains of the bacteria can cause illness and possibly death.
This is Chipotle's third food contamination outbreak since August, according to Reuters. The first two involved salmonella and norovirus.
Shares of Chipotle fell as much as 7.4% this morning, and were down 6.5% this year through Friday, Bloomberg reports.
Separately, TheStreet Ratings team rates CHIPOTLE MEXICAN GRILL INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate CHIPOTLE MEXICAN GRILL INC (CMG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, growth in earnings per share, increase in net income and increase in stock price during the past year. We feel its 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 came in higher than the industry average of 1.2%. Since the same quarter one year prior, revenues rose by 12.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, CHIPOTLE MEXICAN GRILL INC's return on equity exceeds that of both the industry average and the S&P 500.
- CHIPOTLE MEXICAN GRILL INC has improved earnings per share by 10.6% 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 $14.13 versus $10.46 in the prior year. This year, the market expects an improvement in earnings ($17.31 versus $14.13).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Hotels, Restaurants & Leisure industry average. The net income increased by 10.8% when compared to the same quarter one year prior, going from $130.80 million to $144.88 million.
- After a year of stock price fluctuations, the net result is that CMG's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: CMG