Why Chipotle Mexican Grilled Stock Up 17% in March – The Fool Motley

What happened

Actions of Chipotle Mexican Grill (NYSE: CMG) gained 16.92% in value last month, according to data from S & P Global Market Intelligence.

To be clear, there was no company-specific news to explain the rise in stock prices. What appears to be pushing up stocks is investors' growing optimism about Chipotle's growth prospects following the release of better-than-expected fourth quarter results in early February.

Chipotle shares were also improved by an analyst in March, citing strong comparable sales trends in the first quarter based on circuit audits.

SOURCE OF IMAGE: GETTY IMAGES.

So what

Chipotle seems to have completed its recovery after the mess in which it happened a few years ago about food security. In the fourth quarter, same store sales improved significantly, up 6.1% from only 0.9% in the same quarter of the previous year.

Recent performance is particularly encouraging, given the growing competition in the restaurant sector as consumers become more selective and digital distribution offers more options.

Management has made progress in building its "culturally relevant" brand image using social media and traditional media channels. Chipotle received 20% more digital impressions in 2018 without increasing marketing expenses.

Now what

The Chipotle brand, centered on "delicious taste and real ingredients", should help the chain of restaurants stand out in a crowded market.

Investors should keep an eye on digital sales, which accelerated their growth in the last quarter to 66% year-on-year and accounted for 10.9% of total revenue. Management is focusing in the near term on the continued roll-out of digital ordering and pickup in more restaurants to eliminate friction and reduce ordering process time, which should have a significant impact on the commercial results.