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Chipotle Mexican Grill Inc CMG

Morningstar Rating
$2,627.37 +57.89 (2.25%)
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Company Report

Chipotle Earnings: Strong Traffic and Unit Growth Are Encouraging, but Share Prices Still Concern Us

Wide-moat Chipotle posted strong quarterly earnings, with sales growth across income cohorts and an impressive 7.4% increase in comparable transactions assuaging market concerns after a few high-profile earnings misses. While we expect to leave our 2024 targets for $11.1 billion in revenue and 8.8% unit growth largely intact, we expect to raise our $1,800 fair value estimate by a high-single-digit percentage as we now forecast a sharper increase in net unit growth and comparable store sales over the medium term. More concretely, we now expect annual comparable store sales growth of 5% and unit growth of 9.4% between 2024 and 2028, up from 4.6% and 9%, respectively, driven by normalizing construction timelines and stronger comparable store sales benefits from its throughput initiatives and loyalty program innovation than previously expected. We also plan to decrease our Morningstar Uncertainty Rating to Medium from High as we reconsider the firm's sensitivity to systematic risk factors.

Price vs Fair Value

CMG is trading at a 35% premium.
Price
$2,627.37
Fair Value
$1,558.00
Uncertainty
Medium
1-Star Price
$8,887.30
5-Star Price
$7,114.00
Economic Moat
Hmh
Capital Allocation
Wjljwcvcxq

Bulls Say, Bears Say

Bulls

Accelerated digital adoption during the pandemic supercharged Chipotle's loyalty program, which should continue to drive increased order frequency and reduce customer churn.

Bears

Consumer spending may shift toward cheaper grocery and c-store channels if the macroenvionment continues to deteriorate, as it has during previous periods of pressure

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News

Trading Information

Previous Close Price
$2,569.48
Day Range
$2,593.672,636.94
52-Week Range
$1,470.052,725.83
Bid/Ask
$2,607.00 / $2,650.00
Market Cap
$72.05 Bil
Volume/Avg
6 / 209,225

Key Statistics

Price/Earnings (Normalized)
58.39
Price/Sales
7.35
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.82%

Company Profile

Chipotle Mexican Grill is the largest fast-casual chain restaurant in the United States, with systemwide sales of $9.9 billion in 2023. The Mexican concept is predominately company-owned (it recently inked a development agreement with Alshaya Group in the Middle East), with a footprint of nearly 3,440 stores at the end of 2023, heavily indexed to the United States, although the firm maintains a small presence in Canada, the U.K., France, and Germany. Chipotle sells burritos, burrito bowls, tacos, quesadillas, and beverages, with a selling proposition built around competitive prices, high-quality food sourcing, speed of service, and convenience. The company generates its revenue entirely from restaurant sales and delivery fees.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Large Growth
Total Number of Employees
116,068

Competitors

Valuation

Metric
CMG
QSR
YUM
Price/Earnings (Normalized)
58.3923.9625.78
Price/Book Value
23.478.52
Price/Sales
7.354.995.40
Price/Cash Flow
43.0122.4422.55
Price/Earnings
CMG
QSR
YUM

Financial Strength

Metric
CMG
QSR
YUM
Quick Ratio
1.420.880.99
Current Ratio
1.571.011.26
Interest Coverage
3.374.54
Quick Ratio
CMG
QSR
YUM

Profitability

Metric
CMG
QSR
YUM
Return on Assets (Normalized)
16.58%6.44%24.79%
Return on Equity (Normalized)
45.82%54.01%
Return on Invested Capital (Normalized)
18.10%9.94%55.35%
Return on Assets
CMG
QSR
YUM
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