One of last year's more surprising gainers was Chipotle Mexican Grill (CMG -1.31%). The burrito roller soared 49% in 2018, is trading 21% higher year to date, and has more than doubled since bottoming out 11 months ago.

There's been a lot of love coming Chipotle's way on Wall Street, and with the shares hitting two-year highs this week, it's easy to get excited. The rub for longtime investors is that the stock still has a long way to go to hit the all-time highs it scored in late 2015. Chipotle stock is still more than 30% away from its peak price of $757. Momentum is in its corner now, but it will take more than inertia to catapult Chipotle shares to record highs in 2019.

Chipotle employees training at a store.

Image source: Chipotle Mexican Grill.

The turnaround is relative

There are plenty of things working for Chipotle these days. Comps are positive, revenue is growing, and the chain's adjusted profit is growing even faster. However, there are also plenty of imperfections once you dig beneath the superficial metrics.   

Comps may be positive for its latest quarter -- as well as through the first nine months of last year -- but it's only because folks are spending more as a result of price hikes and new items. The actual number of transactions per store declined 2% through the first three quarters of 2018. We will see if Chipotle can end that streak when it reports its fourth-quarter results in two weeks. 

Revenue is moving higher, but not at a very exciting pace. Chipotle's top line has clocked in with a single-digit percentage increase for five consecutive quarters. Brisk expansion used to pad revenue gains, but the buildout has slowed lately. Chipotle actually closed or relocated more restaurants than it opened during the third quarter. Once-promising sister concepts are sputtering. Chipotle shuttered ShopHouse -- which served Southeast Asian cuisine -- a couple of years ago, and it closed down several Pizzeria Locale restaurants in 2018. 

Profitability is taking big steps higher, but mostly because the chain is still working off of depressed levels over the two previous years. Chipotle isn't likely to ever achieve the double-digit net margin it posted from 2012 to 2015. 

The good news is that Chipotle isn't broken. It's just not running the way it was in its prime. BTIG analyst Peter Saleh boosted his price target on the shares from $515 to $605, putting him at the top of the 30 Wall Street pros covering the fast-casual pioneer. He sees a return to double-digit sales growth in 2019, fueled by expansion and comps in the mid-single digits. He also sees continuing margin improvement, with earnings per share soaring better than 45%. 

Chipotle is no longer being held back by the unfortunate string of foodborne illness outbreaks that started in late 2015, even if it's still not in the clear on that front. It's also seeing many of the operational miscues over the past few years shrinking in the rearview mirror.

The chain doesn't need to get back to its peak unit-level sales or companywide margins to take out the all-time high its stock hit in October 2015. There are a lot more locations now than there were in 2015. There are also fewer shares, as buybacks have helped lower the number of outstanding shares by more than 11% in that time. The lower share count means that profits will be higher on a per-share basis than they were before. 

It obviously won't hurt if Chipotle introduces head-turning menu items in 2019 to drum up traffic, finally succeeds in launching a loyalty rewards program, and nails it (for a change) on a sister concept.

But it still managed to gain ground last year without any of those things happening. Whether it's taking baby steps or larger paces, it's at least heading in the right direction. And the all-time highs will follow sooner or later if it doesn't drop the ball in execution.

Check out the latest Chipotle earnings call transcript.