It's been a great afternoon session for Chipotle Mexican Grill investors, who saw their shares rise 2.3% to a price of $54.24 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Its Shares Are Discounted but Has an Elevated P/B Ratio:
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 22.15 and an average price to book (P/B) ratio of 3.11. In contrast, Chipotle Mexican Grill has a trailing 12 month P/E ratio of 53.2 and a P/B ratio of 20.04.
Chipotle Mexican Grill's PEG ratio is 2.3, 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.
Strong Revenue Growth and a Decent Current Ratio:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,865 | $5,586 | $5,985 | $7,547 | $8,635 | $9,872 |
| Operating Margins | 5% | 8% | 5% | 11% | 13% | 16% |
| Net Margins | 4% | 6% | 6% | 9% | 10% | 12% |
| Net Income (M) | $177 | $350 | $356 | $653 | $899 | $1,229 |
| Net Interest Expense (M) | $10 | $14 | $4 | $8 | $21 | $63 |
| Depreciation & Amort. (M) | $202 | $213 | $239 | $255 | $287 | $319 |
| Diluted Shares (M) | 28 | 28 | 28 | 29 | 28 | 28 |
| Earnings Per Share | $6.31 | $12.38 | $12.52 | $22.9 | $32.04 | $44.34 |
| EPS Growth | n/a | 96.2% | 1.13% | 82.91% | 39.91% | 38.39% |
| Avg. Price | $413.58 | $722.89 | $1060.86 | $1615.89 | $1445.2 | $54.2 |
| P/E Ratio | 65.13 | 57.28 | 83.27 | 69.62 | 44.77 | 1.22 |
| Free Cash Flow (M) | $334 | $388 | $290 | $840 | $844 | $1,223 |
| CAPEX (M) | $287 | $334 | $373 | $442 | $479 | $561 |
| Current Ratio | 1.81 | 1.61 | 1.73 | 1.58 | 1.28 | 1.57 |
Chipotle Mexican Grill benefits from rapidly growing revenues and increasing reinvestment in the business, strong operating margins with a positive growth rate, and exceptional EPS growth. The company's financial statements show generally positive cash flows and a decent current ratio of 1.57.
