Chipotle's Recovery Is on Track: More Squawk From Jim Cramer
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Version 0 of 1. NEW YORK (TheStreet) -- Shares of Chipotle Mexican Grill (CMG) were plunging 7.50% to $375.26 on heavy trading volume Wednesday morning after the Mexican-style food chain reported a bigger-than-expected decline in same-restaurant sales for the 2016 third quarter. Comparable-restaurant sales were down 21.9% for the period, while analysts surveyed by FactSet were anticipating a 18.6% drop. Chipotle expects same-restaurant sales to decline in the fourth quarter but grow in the high single-digits throughout 2017. The company has been struggling to rebound from a string of foodborne illnesses that began late last year. Its recovery appears to be on track with the recoveries of Yum! Brands's (YUM) Taco Bell and Jack in the Box (JACK), which also contended with food-related illnesses in the past, TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning. Companies typically take 18 months to rebound from a scare like E. coli, and Chipotle's problems won't annualize until December, Cramer pointed out. "However, I think it can put in a bottom," he claimed. "The actual trajectory as we saw - barring a couple weeks of storms in October - was pretty good." "Do they have problems? Undeniable," Cramer added. "Will they get through the problems? Equally undeniable." Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C. Chipotle's strengths such as its respectable return on equity which we feel is likely to continue are countered by weaknesses including deteriorating net income, premium valuation and poor profit margins. You can view the full analysis from the report here: CMG |