Newport Beach, California-based Chipotle Mexican Grill, Inc. (CMG) operates a chain of restaurants offering burritos, burrito bowls, quesadillas, tacos, salads, lifestyle bowls, kids’ meals, chips, sides, and drinks. Valued at a market cap of $56 billion, the company also provides delivery and related services through its app and website.

Companies worth $10 billion or more are typically classified as “large-cap stocks,” and CMG fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the restaurant industry. The company’s strength lies in its strong brand identity, commitment to fresh and responsibly sourced ingredients, and its focus on customizable menu options that appeal to diverse customer preferences.

Despite its notable strength, this restaurant operator has slipped 37.4% from its 52-week high of $66.74, reached on Dec. 12, 2024. Moreover, shares of CMG have declined 16.5% over the past three months, considerably underperforming the Nasdaq Composite’s ($NASX) 10.8% return during the same time frame.

In the longer term, CMG has fallen 21.9% over the past 52 weeks, lagging behind NASX's 25.5% uptick over the same time period. Moreover, on a YTD basis, shares of CMG are down 30.7%, compared to NASX’s 11.3% rise.

To confirm its bearish trend, CMG has been trading below its 200-day moving average since early January, with slight fluctuations, and has remained below its 50-day moving average since late July. 

On Jul. 23, CMG delivered mixed Q2 results, and its shares plunged 13.3% in the following trading session.  On the brighter side, its adjusted EPS of $0.33 managed to exceed the consensus estimates by a penny. However, it declined 2.9% from the year-ago quarter. Adding to the negatives, while its revenue of $3.1 billion grew 3% year-over-year, it missed the analyst expectations by 1.3%. Additionally, management reduced its annual comparable sales outlook to flat from prior low single-digit growth, citing weaker consumer demand, which further dampened investor confidence. 

CMG has also lagged behind its rival, Yum! Brands, Inc. (YUM), which gained 8.3% over the past 52 weeks and 7.7% on a YTD basis. 

Despite CMG’s recent underperformance, analysts remain highly optimistic about its prospects. The stock has a consensus rating of "Strong Buy” from the 32 analysts covering it, and the mean price target of $59.03 suggests a 41.3% premium to its current price levels.