CMG Stock Study (11-17-25)

I recently did a stock study on Chipotle Mexican Grill, Inc. (CMG, $31.57).

M* writes:

     > Chipotle Mexican Grill is the largest fast-casual chain restaurant in
     > the United States, with systemwide sales of $11.3 billion in 2024.
     > The Mexican concept is almost exclusively company-owned, with just
     > three license stores operated through a master franchise relationship
     > with Alshaya Group in the Middle East. It had a footprint of 3,726
     > stores at the end of 2024, heavily indexed to the United States,
     > although it maintains a small presence in Canada, the UK, 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.

Over the past decade, this large-size company has grown sales and EPS at annualized rates of 12.5% and 37.4%, respectively. Lines are mostly up, straight, and narrowing except for a sales dip in ’16 and larger EPS decline (food safety scare) in ’16. Ten-year EPS R^2 is 0.59 and Value Line (VL) gives an Earnings Predictability score of 70.

Over the past decade, PTPM trails peer and industry averages while ranging from 1.0% in ’16 to 17.8% in ’24 with a last-5-year mean of 12.7%. ROE leads peer and industry averages while increasing from 19.2% (’15) to 41.7% (’24) with a last-5-year mean of 33.8%. Debt-to-Capital is lower than peer and industry averages despite increasing from 0% (’15) to 55.4% (’24) with a last-5-year mean of 59.0%. The company has no long-term debt (annual rentals only).

Quick Ratio is 1.4 per M* who assigns “Wide” Economic Moat, gives “Exemplary” rating for Capital Allocation, and a B grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 5.3% and 9.8% for ’25 and ’26, respectively (based on 32 analysts).
• Zacks projects YOY 5.5% and 10.0% for ’25 and ’26, respectively (11 analysts).
• VL projects 10.6% annualized growth from ’24-’29.
• CFRA reports ACE 6.5% YOY and 8.2% per year for ’25 and ’24-’26, respectively (9).
• M* offers a 2-year annualized ACE of 8.2%.

My 5.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 4.4% and 8.5% per year for ’24-’26 and ’24-’27, respectively (based on 38 analysts).
• Nasdaq.com projects 10.2% and 14.4% per year for ’25-’27 and ’25-’28 [14 / 7 / 1 analyst(s) for ’25 / ’27 / ’28].
• Seeking Alpha projects 4-year annualized growth of 13.7%.
• Finviz gives ACE 5-year annualized growth of 8.4% (8).
• Argus projects 5-year annualized growth of 25.0%.
• LSEG estimates LTG at 11.4%.
• YF projects YOY 3.4% and 5.5% for ’25 and ’26, respectively (34).
• Zacks projects YOY 4.5% and 6.0% for ’25 and ’26, respectively (14), along with 5-year annualized growth of 8.4%.
• VL projects 15.0% annualized growth from ’24-’29.
• CFRA gives ACE 7.3% YOY and 9.7%/year for ’25 and ’24-’26, respectively, along with a 3-year CAGR of 9.0%.
• M* projects long-term annualized growth of 16.5%.

My 8.0% forecast is below the long-term-estimate range (mean of seven: 14.1%). Initial value is ’24 EPS of $1.11/share rather than 2025 Q3 $1.13 (TTM).

My Forecast High P/E is 40.0. Over the past 10 years, high P/E ranges from 50.2 in ’15 to 115 in ’20 (excluding 723 upside outlier in ’16) with a last-5-year mean of 74.1 and a last-5-year-mean average P/E of 56.6. I am below the range and at upper end of my comfort zone.

My Forecast Low P/E is 20.0. Over the past 10 years, low P/E ranges from 30.3 in ’23 to 54.9 in ’21 (excluding upside outlier of 478 in ’16) with a last-5-year mean of 39.1. I am forecasting well below the range.

My Low Stock Price Forecast (LSPF) of $22.20 is default based on initial value given above. That is 29.7% and 25.5% less than the previous closing price and 52-week low, respectively.

These inputs land CMG in the BUY zone with a U/D ratio of 3.7. Total Annualized Return (TAR) is 15.7%.

PAR (using Forecast Average—not High—P/E) of 9.3% is less than I seek for a large-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 186 studies done in the past 90 days (36 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 10.5%, 13.9%, 45.0, and 31.4, respectively. I am lower across the board. VL projects a future average annual P/E of 32.0 that is less than MS (38.2) and greater than mine (30.0).

MS high / low EPS are $2.16 / $1.12 versus my $1.63 / $1.11 (per share). My high EPS is less due to a lower growth rate. VL’s $2.16 is equal to MS.

MS LSPF of $31.20 implies a Forecast Low P/E of 27.9: less than the above-stated 31.4. MS LSPF is 11.3% less than the default $1.12/share * 31.4 = $35.17 (INVALID on today’s date) resulting in more conservative zoning. MS LSPF is still 40.5% greater than mine.

MOS is robust in the current study because my inputs are less than MS and respective analyst/historical ranges. As further support, MS TAR is [5.3%/year] greater than mine along with MS LSPF.

With regard to valuation, PEG is 3.2 (overvalued) per Zacks and my projected P/E but undervalued (0.6) per M*. Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.49 along with the “Quick and Dirty DCF” that has it substantially undervalued by 56%.

Per U/D, CMG is a BUY under $32.90/share. BI TAR criterion is met [65.2 / ((14.87 / 100 ) +1 ) ^ 5] = $32.60 with a forecast high price of ~$65 (no dividend).

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