Will Recent News Hurt Chipotle Mexican Grill Stock?

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With shares of Chipotle Mexican Grill (NYSE:CMG) trading around $579, is CMG an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Chipotle Mexican Grill operates restaurants throughout the United States, as well as two restaurants in Toronto and two in London. The company’s restaurants serve a menu of burritos, tacos, burrito bowls, and salads. Chipotle Mexican Grill manages its operations and restaurants based on six regions that all report into a single segment. It prides itself on serving the best possible ingredients during a time when consumers are more keen to this detail.

Chipotle stirred up the media and guacamole lovers with news that it could “suspend” guacamole from its menu due to global warming. But a restaurant spokesperson tells the Los Angeles Times that, “This is way overblown.” The annual report from the restaurant chain warned “increasing weather volatility or other long-term changes in global weather patterns, including any changes associated with global climate change, could have a significant impact on the price or availability of some of our ingredients. In the event of cost increases with respect to one or more of our raw ingredients, we may choose to temporarily suspend serving menu items, such as guacamole or one or more of our salsas, rather than paying the increased cost for the ingredients.”

Chipotle’s Chris Arnold told the Los Angeles Times on Wednesday morning that the disclosure was routine. “As a public company … we are required to disclose any potential issues that could have potential impact on our business, and we do that very thoroughly.” So far, Chipotle is handling weather-related problems with ingredients just fine.

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