Investors in beleaguered burrito business Chipotle Mexican Grill (CMG) celebrated Tuesday as the company announced promising, preliminary results for the fourth quarter.
However, it is not time to start heralding a comeback. Chipotle still faces deep-rooted problems 16 months after food-borne bacteria sickened scores at multiple locations and tainted the brand. Investors should avoid the stock.
For the quarter, Chipotle recorded a 4.8% drop in same-store sales.
To be sure, this is not the disaster that it would be at other companies. Moreover, sales have been on an upward trend over the past three months.
For October, same-store sales plummeted by 20%. In November, comparable sales fell by only 1.4%, and in December they increased by 14.7%. Chipotle shares rose 4.64% to $414.48 in Tuesday trading.