Corporate insiders have deep insight into their companies’ operations. This means that their buying and selling activity can provide investors with valuable trading signals.
In this report, we are going to highlight some interesting insider buying at Chipotle Mexican Grill Inc (CMG:US). Chipotle is a Mexican food chain that operates in the US, Canada, and the UK. Currently, it has over 3,000 stores globally. The company is listed on the New York Stock Exchange and has a market capitalization of $36.03 billion at present.
Chipotle Mexican Grill: Insider Buying
Our data shows that on May 18, board member Gregg Engles bought 300 CMG shares at an average price of $1,266.37 per share. This trade cost the insider $381,152 and increased his holding to 771 shares.
Mr. Engles has experience both in the food industry and the investment industry. Previously, he served as the Chairman and CEO of The WhiteWave Foods Company, a food and beverage business, from October 2012 until April 2017 when it was acquired by Danone S.A. He also served as CEO of Dean Foods Company.
On the investment side, he is the Founder and Managing Partner of Capitol Peak Partners, a capital investment company that is focused on consumer businesses in North America. Given his background, he is likely to have an excellent understanding of Chipotle’s intrinsic value.
What stands out about this trading activity from Mr. Engles is that it has boosted the size of his holding by 64%. The fact that the insider has upped his stake significantly suggests that he sees a lot of value in the stock at present.
Solid Q1 Results
Chipotle recently posted a solid set of results for the first quarter of 2022.
For the period, total revenue increased 16.0% to $2.0 billion with comparable restaurant sales up 9.0% and in-restaurant sales up 33.1%. Meanwhile, adjusted diluted earnings per share came in at $5.70, a 6.3% increase year on year. Operating margin was 9.4%, versus 9.3% a year earlier.
During the quarter, the group repurchased $260.1 million of stock at an average price of $1,490 per share. The board also approved the investment of up to an additional $300 million to repurchase shares of its common stock.
"Chipotle's performance in the first quarter was strong, despite challenges from the Omicron variant and on-going inflation," commented Chairman and CEO Brian Niccol.
Looking ahead, Chipotle said that it expects comparable restaurant sales growth of 10% to 12% for the current quarter. Wall Street had been expecting growth of 8.8%.
In light of these results, we see the insider buying here as a bullish indicator.