Chipotle Reports Wednesday With Its Stock 30% Below Its High and 35 Analysts Pointing 30% Higher.

Chipotle Mexican Grill (NYSE: CMG) reports second-quarter results after the market closes on Wednesday, July 29, with its earnings call set for 4:30 p.m. ET.

At about $33 as of this writing, shares sit about 30% below their 52-week high of $46.61, and about 18% above their 52-week low. Meanwhile, the 35 analysts covering the burrito chain carry an average price target of about $43 -- roughly 30% above the stock.

The market, in other words, is priced as if the growth stock's best days are behind it. But the analysts, on average, don't seem to believe that. Wednesday's report should say a lot about which side has it right, and the answer arguably hinges on two lines deep in the release: transactions and restaurant-level margin.

Image source: The Motley Fool.

The number to watch is transactions

For most of 2025, Chipotle's problem was that fewer people came. Comparable restaurant sales fell 4% year over year in the second quarter of 2025, driven by a 4.9% drop in transactions. The fourth quarter was better but still negative, with comparable sales down 2.5% on a 3.2% transaction decline.

For the full year, comparable sales fell 1.7%, with transactions down 2.9%, even as a higher average check offset part of the decline.

The first quarter of 2026 broke the pattern. Comparable sales rose 0.5%, and the growth came from traffic. Transactions increased 0.6%, while the average check slipped 0.1%.

It's a modest number, but I'd argue it's the right kind -- more customers, not just higher prices. CEO Scott Boatwright said the quarter "exceeded expectations" as the company advanced its "Recipe for Growth" strategy.

Worth noting, too: the quarter Chipotle is about to report laps that minus-4% period from a year ago, the softest comparison on the calendar. If transactions can't grow against that bar, the recovery case weakens considerably.

The rest of the growth machine never stopped, either. First-quarter revenue rose 7.4% year over year to $3.1 billion. The company opened 49 restaurants during the period, 42 of them with a Chipotlane drive-through lane, bringing its base to about 4,090 company-owned locations. And digital orders ran at 38.6% of food and beverage revenue.

Full-year guidance calls for 350 to 370 new locations, including 10 to 15 run by international partners. That works out to nearly a new restaurant a day.

What the recovery is costing

Traffic is coming back at a price, though. Chipotle's adjusted restaurant-level operating margin (the profitability of the restaurants themselves, before corporate costs) was 23.7% in the first quarter, down from 26.2% a year earlier. Operating margin fell to 12.9% from 16.7%. And non-GAAP (adjusted) earnings per share declined 17.2% year over year to $0.24.

So Wednesday's report has to show two things moving the right way at once. A second consecutive quarter of positive transactions would show the traffic turn is holding. And an adjusted restaurant-level margin near the first quarter's 23.7%, rather than another step down, would show the company isn't simply buying its customers back.

Guidance matters, too. Management's current outlook calls for about flat comparable sales in 2026. Holding that line, or nudging it higher, would say the first quarter wasn't a fluke.

Meanwhile, the valuation bar the stock has to clear is not demanding.

At about 29 times earnings, Chipotle trades at about the same multiple as the S&P 500, and at about 27 times forward earnings estimates. At its 52-week high, the market paid nearly $47 for this business. It now pays about $33.

Of course, a cheaper-than-usual Chipotle isn't automatically a buy. Restaurant margins are still sliding, and the traffic recovery is, so far, exactly one quarter old. A single quarter could easily prove to be noise.

So, should investors buy ahead of the report? I personally wouldn't. At a market multiple, Chipotle doesn't need a heroic quarter, just confirmation. But with the whole case resting on one quarter of positive traffic, waiting a day for proof seems like a fair trade. If transactions hold positive and the margin stops sliding, I'd get interested, even at a somewhat higher price. If traffic flips negative again, the market's skepticism will have been right, and a better entry point could follow.

Wednesday afternoon, the transaction line is the first number I'll check.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short September 2026 $35 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.