Chipotle Mexican Grill Positive Earnings and Middleby’s New Acquisition
Chipotle Mexican Grill
Chipotle has become one of the top fast-food chains in the United States. Even with the COVID-19 pandemic, it has continued to grow as many people ordered through Chipotle’s app and third-party delivery services such as DoorDash and Postmates.
On Wednesday, after close, Chipotle announced encouraging earnings. The earnings per share crushed estimates, with Chipotle announcing $5.36 per share in comparison to the expectation of $4.89 per share. Revenue was on par with expectations, but the highlight of the report was Chipotle’s digital service. For the first time in their history, online orders overtook in-restaurant orders as many stayed back due to the third wave of COVID-19. This is extremely bullish as Chipotle now has a solid online platform that they can now expand as delivery seems to be the future.
Chipotle closed at $1,507.62 on Wednesday, down 1.6% on the day.
Middleby is a food equipment company that is based in Chicago, Illinois. Up nearly 3 times from its 52-week high, the company has seen a nice recovery in the last few months.
On Wednesday, Middleby announced the acquisition of one of its main competitors, Welbilt. The deal was all-stock with a value of $4.3 billion, and the hopes are to create a leading company in the industry. It is expected to increase Middleby’s per-share earnings, with a possible 10% increase in the next year. The deal was backed by legendary investor Carl Icahn, who was Welbilt’s largest shareholder.
Unlike most scenarios, both companies saw a rise in their share price. Welbilt rose a massive 44.56% and Middleby rose 9.09%.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.