Every industry has a key metric that analysts are looking for. That could relate to gross profit margins, sales volume, or the spread between the cost of borrowing and the cost of lending.
For the restaurant industry, sales are a key component. Higher-end chains may look at how many times a table turns over in the course of an evening, but for most players, that still translates to plain sales.
Chipotle Mexican Grill (CMG) just reported that their sales have been unaffected this year by market conditions. The company saw revenue climb 16 percent year-over-year, and restaurant sales rose 9 percent year-over-year, handily beating analyst expectations.
The move comes as the company has experimented with new menu items in the past year, and has even built out some things like drive-thru options in some locations.
Action to take: Investors may like shares of the growing restaurant chain, which has had no trouble losing customers even as they’ve had to raise prices. Shares are still about 25 percent off the stock’s 52-week high. AS a growth play, however, shares are still a bit conventionally expensive, and the stock is a long ways from paying a dividend.
For traders, options are pricey, given the high price of shares. For those who can afford it, the September $1,900 calls, last going for about $24.00, could see mid-to-high double-digit growth in the months ahead. Given the high price of the contract, traders should look for a quick and moderate gain and take quick profits.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
