Chipotle Stock Is Down 14% in 2026, the Burrito Chain’s Recovery Is Just Getting Started

Key Stats for Chipotle Mexican Grill

• Current Price: $32.23
• LTM Gross Margin: 39.6%
• LTM EBIT Margin: 15.9%
• Fwd 2-Year Revenue CAGR: ~10%
• Fwd 2-Year EPS CAGR: ~8%
• Shares Outstanding: 1,282.73 million

Chipotle Mexican Grill (CMG) spent most of 2025 doing something it had never done before: posting negative comparable restaurant sales. Traffic fell, margins compressed, and two major institutional holders, Pershing Square and Viking Global, exited their positions entirely.

The stock followed, shedding roughly 40% from its 52-week high. What’s changed in 2026 is that the business is starting to show signs of life again, and the question now is whether the selloff has created a genuine opportunity or simply reflects a more permanent reset in expectations.

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Q1 Marked the First Positive Comp in Over a Year

Chipotle reported Q1 2026 revenue of $3.1 billion, up 7.4% year over year, beating expectations. More important than the headline number was the comparable restaurant sales figure: up 0.5%, driven by a 0.6% increase in transactions.

That return to positive traffic, after five consecutive quarters of declines, is the data point bulls have been waiting for. CEO Scott Boatwright called it “tangible progress across operations, digital, menu innovation, people, and development.”

Revenue has grown steadily from $7.5 billion in 2021 to nearly $12 billion in 2025, but the operating margin story is more complicated. Margins expanded from 11% in 2021 to nearly 18% in 2024 before pulling back in 2025 as wage inflation, higher beef and freight costs, and lower average restaurant volumes took a bite.

Q1 2026 operating margin came in at 12.9%, down from 16.7% a year earlier, with restaurant-level margin at 23.7% versus 26.2% in the prior year period. Management characterized the pressure as temporary and reaffirmed a long-term target of approaching 30% restaurant-level margins.

The Earnings Trajectory Still Points Higher

Despite the near-term margin headwinds, the longer-term earnings picture remains intact. Normalized EPS has grown from $0.51 in 2021 to $1.17 in 2025, a consistent compounding trajectory that reflects both revenue growth and the operating leverage embedded in Chipotle’s model.

Consensus estimates project continued acceleration toward roughly $1.13 in 2026 before resuming growth to around $2.20 by 2030 as margins recover and the restaurant base expands.

The near-term EPS softness in 2026 relative to 2025 reflects the current margin pressure, not a deterioration in the underlying business.

Chipotle generated $651 million in operating cash flow in Q1 alone, and repurchased $701 million of stock at an average price of $36.14, with $1 billion remaining under its buyback authorization.

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What the Valuation Model Says

TIKR’s model targets around $62 per share in the mid case, representing roughly 94% total return from current levels at about 16% annualized over 4.5 years. The scenario range is wide: the low case lands near $77, while the bull case reaches around $136.

Returns here are driven almost entirely by earnings growth rather than multiple expansion, with P/E change projected to be slightly negative across all three scenarios.

That is an important detail, the model is not counting on a re-rating, which makes the return profile more durable if the assumptions hold.

The Recipe for Growth strategy is the key input. CEO Scott Boatwright’s five-pillar plan centers on a high-protein menu, a high-efficiency kitchen equipment package now deployed across more than 600 locations, an AI-driven loyalty relaunch, and continued unit expansion.

Locations running the new equipment are showing 200 to 400 basis points of comp improvement over the chain average. With roughly 2,000 locations expected to have the full package by year-end, the comp recovery thesis has a clear operational mechanism.

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What the Bulls Are Betting On

• Unit growth is a decade-long runway. Chipotle has 4,090 restaurants today against a long-term North American target of 7,000. Opening 350 to 370 restaurants per year at the economic Chipotle generates is a compounding machine that doesn’t require any help from same-store sales to create value.
• Margin recovery is a matter of when, not if. Management has explicitly reaffirmed the algorithm of $4 million average unit volumes and approaching 30% restaurant-level margins. If the high-efficiency equipment rollout delivers as early as locations suggest, the path back toward peak margins becomes visible.
• The stock is at its cheapest multiple in years. After a 40% drawdown from the highs, CMG trades at a meaningful discount to its historical premium. With 28 of 39 analysts maintaining Buy ratings and zero Sells, the Street’s conviction in the long-term thesis remains intact.

What the Bears Are Watching

• Flat comp guidance for the full year is not inspiring. Management guided for comparable restaurant sales to be about flat in 2026, which is conservative but leaves little room for error if the consumer environment softens further.
• Margin compression has lasted longer than expected. Restaurant-level margins have declined for five consecutive quarters. Wage inflation, beef costs, and lower volumes are persistent headwinds, and the equipment rollout is taking time to reach the entire chain.
• The multiple still carries expectations. Even after the selloff, Chipotle is not a cheap stock in absolute terms. Any stumble in the comp recovery or further margin deterioration could pressure the shares further before the recovery thesis fully plays out.

At $32, Chipotle is a high-quality business trading at a price that reflects genuine near-term uncertainty rather than a broken long-term story. The TIKR model’s mid-case return of around 16% annually assumes earnings growth does the heavy lifting without requiring any multiple expansion. For patient investors, that is a compelling setup.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!