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Investors are consistently bullish on Chipotle Mexican Grill (NYSE: CMG) stock, but it picked up some extra hype recently with its attention-grabbing 50-for-1 stock split on June 26.

Since then, the hype has calmed down, and shares have pulled back from their year-to-date highs. But even so, Chipotle stock is up a market-beating 26% so far this year. Can it go even higher before the end of 2024?

Why Chipotle stock is surging

The stock-split hype certainly had a lot to do with Chipotle stock's popularity this year. Management first announced the transaction in mid-March, becoming another high-profile stock split for 2024. Shares gained 17% between the announcement and the split.

Stock splits can only happen with years of share-price growth and a bullish outlook, and there's a lot to be bullish about here. Chipotle is already the leader in the fast-casual dining category. Its fresh and healthy concept at an affordable price attracts a loyal crowd. It boasts strong, consistent comparable-sales growth at a time when many competing restaurant chains are struggling. It's also highly profitable with expanding margins despite rising food and labor expenses.

The company continues to expand at a rapid pace too; it's already opened 47 stores in the first quarter, and it plans to open about 300 total in 2024 (up from 271 last year). Management has set a long-term goal of expanding its store count from about 3,500 to over 7,000.

Is Chipotle too expensive?

A common concern from investors, however, is Chipotle's valuation. The stock trades at a price-to-earnings (P/E) ratio of 62 as of this writing. That's a premium valuation, but believe it or not, it's trading at a discount to its five-year average multiple of 76.

Chipotle commands a premium valuation because of its reliable track record, but it's still a high premium for a company reporting low double-digit revenue growth. Nvidia, by comparison, trades at a P/E ratio of 75 while reporting triple-digit growth.

Chipotle has fallen 12% since its stock split. Much of restaurant sector has retreated in reaction to analysts' calls for a slow summer season, but investors need to keep track of long-term developments, not short-term volatility. A great business will bounce back from temporary headwinds.

Even trading below its historical average, Chipotle stock isn't a bargain, so the question is: Can Chipotle sustain this valuation?

Current momentum suggests the stock can end the year with market-beating gains. But that's a short-term outlook. Looking further out, Chipotle has an ambitious expansion plan, and long-term investors will likely thank themselves for buying Chipotle stock today.

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.