Is It Too Late to Buy Chipotle Stock?

Chipotle Mexican Grill (NYSE: CMG) got tons of attention recently for its 50-for-1 stock split , one of the biggest-ever stock splits. That happened in June, and the hype has since died down. Did you miss the best chance to buy Chipotle stock?

Unstoppable success

Even if the hype of the stock split has died down, Chipotle's momentum hasn't. The company reported stellar second-quarter results, with revenue up 18.2% year over year, driven by an 11.1% increase in comparable sales. Operating margin increased from 17.9% to 19.3%, and earnings per share (EPS) were up from $0.25 last year to $0.33 this year, split-adjusted. In other words, it was a typical fantastic quarter.

Chipotle has carved out a niche in restaurant chains with healthy, fresh food at moderate prices. Although there are many new start-ups with this model, Chipotle was the first and has perfected the model over the years. It has more than 3,500 stores and built up a fan base of loyal customers. Since it targets an affluent clientele and is cheaper than luxury dining, it's been resilient in the face of inflation.

The restaurant chain opened 52 new locations in the second quarter, and 46 of them have a Chipotlane drive-thru service. That detail tells investors that Chipotle is on-trend and keeping up with consumer demand.

It has a robust omnichannel strategy, and digital plays a large role in its current success. It's providing the kinds of solutions its customers want, which today are digital and quick pickup options, leading to greater engagement and higher sales.

Are things starting to change?

Kura Sushi , another fast-casual style restaurant chain, is one of the first restaurants to report quarterly results and warned of weaker-than-expected performance for the summer. That began a domino effect of falling restaurant expectations and stock prices. Several analysts weighed in with their own warnings about restaurant spending this summer.

Chipotle didn't hide its own cautionary guidance for a slower pace of sales growth over the summer. Management said that comparable-sales growth pulled back to 6% in June, and for a quarter with 18% growth, that's a sharp pullback. It said that was continuing into July, and that the summer months have been difficult to predict over the past few years due to changing pandemic-related trends.

For the price of a few burritos, buy Chipotle stock

Stocks often surge after a stock split, but Chipotle stock is down 24% since its split. Credit a mix of intense hype coming to a close, along with highly negative sentiment around the industry.

However, there's some really good news for investors. Arguably, the main complaint any investor has against Chipotle isn't about the company itself but its valuation . Chipotle stock has traded for a high premium, relative to similar stocks, and in comparison to the broader market, in general. Even though Chipotle isn't really a growth stock, its valuation has matched or surpassed fast-growing stocks.

At this new, lower price, Chipotle stock is trading at a price-to-earnings ratio of 49, well below its five-year average. Chipotle stock continues to fall and could get even lower. But you can't time the market. The long-term thesis for investing in Chipotle stock is strong. The company is resilient and believes it has large expansion opportunities. It's keeping up high sales growth, in addition to being incredibly profitable.

This looks like the attractive entry point investors have been waiting for. If you've been holding out for a better price, here it is.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy .