Stock splits sure get the attention of investors.
A stock split may seem like a simple division of an existing pie into smaller bits, but it only happens when the business is on a positive streak marked by a surge in the share price.
Plus, when a company’s leadership opts for a stock split, it gives off a powerful signal stating their confidence in future growth.
Back in March, Chipotle Mexican Grill (NYSE: CMG) made headlines with its surprising announcement of a massive multiple stock split.
Every existing share will be divided into 50 new shares. Shareholders can expect this on June 25 if they held records by June 18.
Chipotle’s stock just keeps on winning. It’s quite the success story for Chipotle, a publicly traded company that’s experienced some lows yet towered over the S&P 500 in the last five years, and in most other periods.
Many praise Chipotle for its unique fast-casual model that contributes to customer loyalty, vibrant sales, and impressive profits. Replicating such a model? Even harder.
A standout for its fresh, healthy Mexican cuisine priced moderately, Chipotle is pricier than most fast-food leads but cheaper than a regular dine-in restaurant.
It strategically targets wealthier customers who typically remain resilient during economic ups and downs.
Combine this with steady success over the past few years, enduring issues like the pandemic and rising inflation, and you have a brand that’s more than solid.
It even showcases good profitability with an ascending trend in margins and net income.
There have been attempts by other brands to achieve the same success as Chipotle. Numerous emerging names have been projected as ‘the next Chipotle’, but Chipotle seems to have a unique recipe for victory, setting it apart.
CEO Brian Niccol’s recent comment sums it up, “The next Chipotle is Chipotle.”
When you think about its operating margins, positions held against Sweetgreen, Shake Shack, and Cava Group provide revealing insights.