Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Chipotle (CMG 0.17%) were caught in another grease fire today, falling as much as 16%, after the company missed estimates for the second quarter in a row
So what: All key metrics came in under expectations, including revenue, earnings per share, and same-store sales. These were not huge misses by any means but, with a narrative already developing that this growth engine is running out of gas, any disappointment is going to send investors fleeing. To make matters worse, the company projected a slowdown in fourth-quarter comps from the 4.8% posted in Q3, and 2013 same-store sales growth of just "flat to low single digits." That's a far cry from the double-digit comps the burrito roller was putting up in recent quarters.
Now what: The stock has now lost nearly 50% of its value in just six months after reaching an all-time high above $440. Investors are surely frustrated with the recent results, but that doesn't mean cashing out now is the right move. I'm a longtime shareholder, and I still believe in the long-term growth story because the company has the brand strength and market appeal to double or triple its store count and sales through domestic and international expansion. Shares won't be bouncing back to the $400 mark anytime soon, but this is certainly not a broken company.
For more thorough coverage of Chipotle's earnings report, click here to get my full-length analysis.
And to make sure you don't miss any breaking news on the burrito chain, add it to your Watchlist by clicking here.
