It’s been seven months since Chipotle Mexican Grill (NYSE:CMG) effected one of the largest stock splits in the history of the NYSE, splitting shares by 50-to-1. It took the price of CMG stock from around $3,300 per share to $65 a stub.

Splits, of course, are meaningless to the value and operations of the business. Everything is the same pre-split and post-split except now the stock is cheaper and there are more shares trading.

Since the split, though, Chipotle has failed to return to that high point. In fact, in the month following the split, the fast-casual restaurant chain lost over a quarter of its value, though at $58 a share today, it is up 17% from those lows.

Chipotle Mexican Grill reports fourth quarter earnings on Tuesday. Feb. 4 after the market closes. Here’s why the burrito bowl maker is a buy before earnings.

New boss is the same as the old boss

Wall Street expects Chipotle to report $2.85 billion in revenue, a 13% increase from the year-ago period, generating earnings of $0.24 per share, up 14% from the $0.21 it reported last year. Management doesn’t provide guidance, though it did say it expected full-year comparable store sales to be up in the mid- to high-single-digit range.

The fact Chipotle is able to keep drawing its customers back again and again indicates just how enduring the space is that the restaurant has carved out for itself in the industry. The convenience, quality, and affordability of its menu continues to resonate with consumers. The restaurant chain has found a formula that works, and even bringing in a new CEO last year following the departure of Brian Niccol, who left to run Starbucks (NASDAQ:SBUX), isn’t likely to change things up much.

Scott Boatwright served as CMG’s COO since 2017 and has been leading Chipotle on an interim basis following Niccol’s departure. Having had a hand in the restaurant’s strategic direction over the past eight years suggests there won’t be any sudden shifts.

Expanding at home and abroad

Boatwright has committed to expanding Chipotle to 7,000 locations by the end of the decade, about double its current 3,600-restaurant footprint. And part of that will be adding its drive-thru Chipotlanes to new and existing stores.

Boatwright told analysts on Chipotle’s third-quarter earnings conference call the restaurant expected to open as many as 345 new locations in 2025 and 80% will feature the popular drive-thru window. When it reports its results on Tuesday, Chipotle will likely have opened another 300 or so for all of 2024.

And expansion is not occurring just in the U.S. International markets remain an exceptionally ripe opportunity for the fast-casual restaurant. In Q3, Chipotle opened its first restaurant in Edmonton, Alberta, bringing the total to 50 in Canada.

Similarly, Chipotle also opened its first restaurant in Dubai. International expansion could be a big, new growth spurt for the company. It could put Chipotle Mexican Grill on a footing similar to McDonald’s (NYSE:MCD) and Starbucks.

Consumers keep coming back for more

Signs point to strong growth in Q4. Placer.ai, a location intelligence data specialist, says Chipotle enjoyed significant visit growth in 2024 compared not only to its own performance in 2023, but to the fast-casual restaurant industry as a whole.

Importantly, Placer.ai notes that Chipotle’s strategy of expanding beyond metropolitan areas is working as “five of the top ten states for visits per location growth are among the least densely populated in the country.”

It all adds up to CMG stock being a buy now before earnings, and quite possibly more so afterwards.

There were several significant weather events in the fourth quarter that could impact Chipotle’s performance. It may result in lower than expected sales, profits, and comps. Any adverse reactions by the market, however, should be though of as  buy-in opportunity for long-term investors.

Key takeaway

With that said, CMG stock is not cheap. It trades at 54 times earnings, 7 times sales, and goes for 63 times the free cash flow it produces. Yet Chipotle has always traded at a premium and its excellent operations justify it.

It should also benefit from food and input cost inflation that eased considerably last year. Analysts have a consensus one-year price target of $69 a share, though for those who updated their models in January, that rises to $78 a share, an implied 34% gain.

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