In a closely watched event, Chipotle Mexican Grill (NYSE: CMG) recently completed a historic 50-for-1 stock split, bringing down the stock's price from four figures to approximately $65. The decision to split the stock was driven by the restaurant company's impressive performance, with shares soaring 44% in 2024 and a staggering 348% over the past five years.

Stock splits usually occur when a company's share price becomes too high, which is a positive problem for Chipotle, indicating strong investor interest and performance. By dividing the shares, the stock becomes more affordable and accessible to a larger number of investors.

Following the stock split announcement in March, Chipotle's shares have experienced a 17% climb, possibly driven by the anticipation and optimistic market sentiment surrounding the event. However, it is crucial to note that, fundamentally, nothing has changed with Chipotle. The company continues to operate its popular fast-casual stores, offering Tex-Mex favorites like bowls and burritos.

Chipotle's financial results remain solid, despite external challenges. Revenue rose by 14.1% in the first quarter of 2024, supported by a 7% growth in same-store sales and the opening of 47 new restaurants. The company's profitability is evident through its proven pricing power, with an average operating margin of 11.5% over the past five years, and 27.5% of revenue turning into operating profit in the first quarter alone.

Looking ahead, Chipotle's management envisions further growth potential, aiming to expand to 7,000 stores in North America, double its current footprint. This ambitious goal demonstrates the leadership team's confidence in the company's ability to penetrate its key market.

Despite these positive indicators, some analysts caution against jumping into the stock at its current valuation. With a price-to-earnings ratio (P/E) of 70.1, investing in Chipotle may lack a margin of safety in case of disappointing quarterly financial results. While unsustainable trends can persist, the stock's high valuation suggests caution is warranted.

In conclusion, while Chipotle Mexican Grill's stock split makes it more accessible to investors, the current valuation raises concerns about its attractiveness as an investment opportunity. Analysts suggest waiting for a P/E multiple drop below 30 before considering it a potential no-brainer investment. Investors are urged to exercise prudence and examine other potential stocks that offer more compelling growth prospects.

Please note that Neil Patel and his clients do not hold positions in any of the mentioned stocks. The Motley Fool discloses its positions in and recommends Chipotle Mexican Grill.