If you are going to do one thing, do it massive. That seems to be the mindset of Chipotle Mexican Grill’s (NYSE: CMG) board of administrators.Final Tuesday, Chipotle introduced that its board authorized a 50-for-1 inventory break up. It isn’t a completed deal simply but. Shareholders should approve the inventory break up on the annual assembly scheduled for June 6. Nonetheless, assuming there are not any roadblocks, the Mexican restaurant chain will break up its shares after the market closes on June 25. Do you have to purchase Chipotle inventory earlier than its ginormous 50-for-1 inventory break up?One of many largest inventory splits everBefore we tackle whether or not to purchase Chipotle inventory, let’s first have a look at the historic nature of the corporate’s upcoming transfer. Chipotle famous in its press launch final week, “This might be one of many largest inventory splits in New York Inventory Alternate (NYSE) historical past.”Why is Chipotle’s stock-split ratio so unusually excessive? For one factor, the restaurant chain has by no means performed a inventory break up in its 30 years of operations. Firms that conduct inventory splits extra continuously sometimes can have decrease stock-split ratios.The primary cause, although, is just that Chipotle inventory has skyrocketed through the years. Its share value at the moment hovers at just a little underneath $3,000. Such a excessive share value makes a 50-for-1 inventory break up sensible.Chipotle’s motivation for splitting its shares is not shocking. Chief Monetary and Administrative Officer Jack Hartung mentioned, “[W]e imagine this may make our inventory extra accessible to workers in addition to a broader vary of buyers.”Causes to contemplate shopping for Chipotle stockShould these Chipotle workers and different buyers contemplate shopping for the inventory? There are a number of causes the reply might be “sure.”Chipotle’s enterprise is booming. Within the fourth quarter of 2023, the corporate’s income jumped 15.4% yr over yr to $2.5 billion. This improve wasn’t simply the results of Chipotle opening a document variety of new eating places. Identical-store gross sales at its present eating places rose 8.4%.Story continuesThe firm’s adjusted earnings per share soared 25% increased in This autumn. This efficiency was made doable partially by a formidable enchancment in working margins on the company and restaurant ranges.Traders also needs to like that Chipotle is increasing into worldwide markets. The corporate opened its first restaurant in Calgary, Canada, in 2023. It plans to open between 10 and 14 new eating places in Canada this yr. Chipotle additionally signed its first worldwide partnership in 2023, teaming up with Alshaya Group to open eating places within the Center East.Nonetheless, the first development alternative for Chipotle continues to be in North America. CEO Brian Niccol mentioned within the This autumn earnings name that he believes the corporate will have the ability to “greater than double our eating places in North America” over the long run. He additionally thinks that Chipotle will have the ability to additional improve its industry-leading revenue margins.Two obtrusive omissionsThere had been two obtrusive omissions from the explanations I discussed for getting Chipotle inventory. One is the upcoming inventory break up. I believe it is doable that the break up may trigger shares to leap much more than they have already got. However even when shares rise, the impression will possible solely be non permanent. Inventory splits change nothing concerning the fundamentals of an organization’s enterprise or prospects.The opposite factor not referenced above is Chipotle’s valuation. The inventory at the moment trades at a ahead price-to-earnings ratio of 52.6. Though Chipotle continues to ship robust development, it isn’t rising quick sufficient to justify that premium a number of, for my part.I do not assume buyers can purchase Chipotle inventory earlier than its ginormous 50-for-1 inventory break up. I do not assume they need to purchase the inventory after a break up, both. There are too many different shares that supply higher bang for the buck.Do you have to make investments $1,000 in Chipotle Mexican Grill proper now?Before you purchase inventory in Chipotle Mexican Grill, contemplate this:The Motley Idiot Inventory Advisor analyst crew simply recognized what they imagine are the 10 finest shares for buyers to purchase now… and Chipotle Mexican Grill wasn’t one in all them. The ten shares that made the lower may produce monster returns within the coming years.Inventory Advisor gives buyers with an easy-to-follow blueprint for achievement, together with steerage on constructing a portfolio, common updates from analysts, and two new inventory picks every month. The Inventory Advisor service has greater than tripled the return of S&P 500 since 2002*.See the ten shares*Inventory Advisor returns as of March 21, 2024Keith Speights has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Chipotle Mexican Grill. The Motley Idiot has a disclosure coverage.Ought to You Purchase Chipotle Inventory Earlier than Its Ginormous 50-for-1 Inventory Cut up? was initially printed by The Motley Idiot