Chipotle (CMG +1.30%) is one step closer to the finish line of its historic stock split. At its annual meeting of shareholders held on June 6, 2024, shareholders approved the measure, paving the way for its 50-for-1 stock split to take place later this month.
There are a few important dates for shareholders to remember. Let's review the particulars so investors will be prepared for the upcoming stock split.
Image source: Chipotle.
Mark your calendar
Chipotle's press release cited several key dates shareholders should mark on their calendars.
The first key date was the annual meeting that took place on June 6, when shareholders voted on the stock split, which the company noted was "one of the biggest stock splits in New York Stock Exchange history." The company said that "shareholders approved an increase in the number of authorized shares of its common stock," which marks an important milestone in the process.
The second key date noted by Chipotle management is the record date. Each shareholder of record as of the close of business on Tuesday, June 25 will be entitled to take part in the upcoming stock split, receiving 49 additional shares for every share they currently own.
The third key date is the distribution date. After the close of business on Tuesday, June 25, 2024, each shareholder will receive the newly minted shares. This officially takes place after the market closes, and the additional shares will automatically be deposited to shareholders' brokerage accounts.
If you're already a Chipotle stockholder, you don't need to do anything more to receive the additional shares. However, it's important to remember that the process can vary from brokerage to brokerage, so some investors might notice a lag of hours or even days before the additional shares show up in your account.
Finally, Wednesday, June 26, is the date Chipotle will begin trading on a split-adjusted basis. Investors should expect shares to trade at roughly one-fiftieth of the price before the split occurred. For example, for each share they own recently worth $3,250, post-split investors will own 50 shares worth roughly $65 each.
NYSE: CMG
Key Data Points
But is the stock a buy?
There's little question that Chipotle has become synonymous with fresh ingredients, and the company is a leader in the fast-casual dining space. This has helped the stock climb an impressive 43% so far this year. Looking further back, early investors were treated to mind-boggling returns, with the stock up more than 14,742% (as of this writing) since its IPO in 2006. With the stock split on the horizon, and the stock trading near record highs, investors are faced with the quintessential investing question: Is the stock a buy, or has the opportunity passed?
Despite Chipotle's impressive march higher, there's still much more opportunity ahead for the burrito purveyor, as evidenced by its recent financial report. In the first quarter, Chipotle generated revenue of $2.7 billion, up 14% year over year, resulting in diluted earnings per share (EPS) of $13.01, up 24%. It's always telling when EPS outpaces revenue growth, as that's a sign that a business' scale and leverage is such that it drops more profits to the bottom line.
Furthermore, Chipotle's comparable restaurant sales (or comps) increased 7%, driven by transactions that jumped 5%, while the average check increased 2%. The company also continues to squeeze more revenue out of each location, as average restaurant sales increased 2%.
Chipotle had 3,479 restaurants at the end of the first quarter, but management is ultimately targeting 7,000 locations in North America. While international growth has taken a back seat to its domestic push, there's also still plenty of opportunity abroad.
Despite the stock hitting an all-time high this week, some on Wall Street believe there's much more to come. Analysts at Goldman Sachs (GS +0.50%) called Chipotle a "top idea," assigning a buy rating and a price target of $3,730. This represents potential gains for investors of 18% over the coming year, compared to the stock's closing price on Wednesday. The analyst cited Chipotle's "ability to scale the business in a highly profitable manner without losing grip on the core operations, including the quality of food/customer experience."
Taken together, the company's robust results, its vast opportunity, and Wall Street's increasingly bullish take illustrate that Chipotle has a long runway of growth ahead.
