“What the heck happened to Chipotle,” Jim Cramer asked Monday on CNBC’s “Mad Money.” “And what are we supposed to do about it now?”
The high-quality Mexican restaurant chain , which Cramer has been a fan of for years, reported an “apocalyptic quarter” last Thursday night, and the stock got hammered on Friday — falling 22 percent from $403 to $316.
Despite being the quintessential growth stock back when it went public more than six years ago, Cramer thinks Chipotle is no longer what it used to be. It used to boast earnings per share increasing in the mid-30s and revenue growth of around 20 percent. Same-store sales used to rise by roughly 12 percent every quarter — the highest of any restaurant chain. It was easy to see that the old Chipotle deserved a premium multiple, he said, which is why the stock was selling for 44 times 2012 earnings estimates of $9 a share before the dismal report we saw last Thursday.