Today we're going to take a closer look at large-cap Consumer Discretionary company Chipotle Mexican Grill, whose shares are currently trading at $2214.52. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
The Market May Be Overvaluing Chipotle Mexican Grill's Earnings and Assets:
Chipotle Mexican Grill, Inc., together with its subsidiaries, owns and operates Chipotle Mexican Grill restaurants. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, Chipotle Mexican Grill has a trailing 12 month P/E ratio of 52.6 and a P/B ratio of 21.09.
Chipotle Mexican Grill's PEG ratio is 1.94, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|---|
Revenue (MM) | $4,865 | $5,586 | $5,985 | $7,547 | $8,635 | $9,536 |
Revenue Growth | n/a | 14.83% | 7.13% | 26.11% | 14.41% | 10.44% |
Gross Margins | 5% | 8% | 5% | 11% | 13% | 16% |
Operating Margins | 6% | 8% | 5% | 11% | 14% | 16% |
Net Margins | 4% | 8% | 6% | 11% | 14% | 12% |
Net Income (MM) | $177 | $458 | $356 | $813 | $1,182 | $1,182 |
Net Interest Expense (MM) | $10 | $14 | $4 | $8 | $21 | $51 |
Depreciation & Amort. (MM) | $202 | $213 | $239 | $255 | $287 | $308 |
Earnings Per Share | $6.31 | $12.38 | $12.52 | $22.9 | $32.04 | $42.14 |
EPS Growth | n/a | 96.2% | 1.13% | 82.91% | 39.91% | 31.52% |
Diluted Shares (MM) | 28 | 28 | 28 | 29 | 28 | 27 |
Free Cash Flow (MM) | $334 | $388 | $290 | $840 | $844 | $1,387 |
Capital Expenditures (MM) | $287 | $334 | $373 | $442 | $479 | $532 |
Current Ratio | 1.81 | 1.61 | 1.73 | 1.58 | 1.28 | 1.53 |
Long Term Debt (MM) | $269 | $2,554 | $2,803 | $3,164 | $3,330 | $3,621 |
Net Debt / EBITDA | -0.02 | 3.05 | 4.07 | 2.17 | 1.99 | 1.62 |
Chipotle Mexican Grill has growing revenues and increasing reinvestment in the business and exceptional EPS growth. Additionally, the company's financial statements display a pattern of improving cash flows and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a positive growth rate.