CHIPOTLE MEXICAN GRILL, INC. (CMG): what the price requires
At today's price, CHIPOTLE MEXICAN GRILL, INC. (CMG) is priced for +23.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/CMG
Headline
| Field | Value |
|---|---|
| Ticker | CMG |
| Company | CHIPOTLE MEXICAN GRILL, INC. |
| Current price | $36.37/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 5.0% |
| Operating margin today | 15.9% |
| Margin compression implied | -10.9pp |
| Implied growth | 23.0% |
| Multiple paid | 27x operating income |
The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.9pp.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.29σ |
| cohort percentile (of 210 peers) | 76 |
| sustained it ~5 years at this level | 33% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.43x | 4 | expensive |
| Earnings | 7.72x | 5 | expensive |
| Relative | 1.30x | 5 | expensive |
| Growth | 1.05x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $26.13 | 1.39x | yes | FCF base $1.5B, growth 6% (input: historical growth), terminal g 4.0%, WACC 8.3%, 6yr projection |
| DCF Exit Multiple | Growth | $40.63 | 0.90x | yes | Exit EV/EBITDA: 23.9x / 25.9x / 27.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $27.99 | 1.30x | yes | P/E 28x (sector median), scenarios: 23.4x / 28.0x / 32.6x (bear / base = sector held flat / bull), EV/EBITDA 18x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $12.06 | 3.02x | yes | BV/sh $1.85, ROE (TTM) 60.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $41.74 | 0.87x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $34.75 | 1.05x | yes | Rev $12.1B, growth 6% (input: historical growth; tapered), Terminal P/S: 3.3x / 3.9x / 4.5x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $23.08 | 1.58x | yes | EPS $1.09, growth 21% (input: historical EPS growth), PEG=1.54 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $3.39 | 10.73x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.52B × (1−25%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $19.80 | 1.84x | yes | BV $1.85 + 5yr PV of (ROE (TTM) 60.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $6.73 | 5.40x | yes | √(22.5 × EPS $1.09 × BVPS $1.85) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $22.95 | 1.58x | yes | EBITDA $2.22B × sector EV/EBITDA 18.0x |
| FCF Yield | Earnings | $4.71 | 7.72x | yes | FCF $1506.3M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $3.79 | 9.60x | yes | SBC-adj FCF $1.40B (FCF $1.51B − SBC $0.11B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $35.17 | 1.03x | yes | EPS $1.09 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $0.53 | 68.62x | yes | BV $1.85 × (ROIC 2.4% / WACC 8.3%) (excluded from median) |
| P/Sales Sector | Relative | $41.96 | 0.87x | yes | Revenue $12.14B × sector P/S 4.5x |
| PEG Fair Value | Relative | $34.61 | 1.05x | yes | EPS $1.09 × (PEG 1.5 × growth 21.2% (input: historical EPS growth)) → PE 31.8x |
| Earnings Yield | Earnings | $11.78 | 3.09x | yes | EPS $1.09 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $871.4m |
| Net debt / NOPAT (after-tax) | -0.61x (net cash) |
| Net debt / operating income (pre-tax) | -0.46x (net cash) |
| Share count CAGR (buyback) | -2.1% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Chipotle is a company-operated restaurant chain whose model produces unusual returns on capital, a trailing operating margin around 15% and a return on equity above 60%, because it owns no franchise drag and runs high-volume kitchens off a small asset base.
- The defining tension is comps versus units: same-store sales were roughly flat in the latest quarter while the company opened dozens of new restaurants, so the growth the price needs is coming from building stores, not from busier ones.
- What to watch is the unit-growth machine and margins: the company is targeting 350 to 370 new restaurants this year toward a long-term 7,000-store North American goal, against five straight quarters of restaurant-margin pressure from wages, beef, and freight.
Bull Case
The balance sheet tells you how confident this business is in itself: Chipotle carries roughly $871 million of net cash and no debt at all. A restaurant chain that funds aggressive expansion entirely from its own cash flow, with money left over to buy back stock, is a company whose unit economics genuinely work. And they do work, at a level few restaurants reach. The model is company-operated rather than franchised, so Chipotle keeps the full economics of each high-volume kitchen, and the result is a trailing operating margin around 15% on $12.1 billion of revenue and free cash flow above $1.5 billion. The return on equity above 60% reflects how little capital the business ties up relative to the cash it throws off; this is a compounding machine that finances its own growth and shrinks its share count by about 2% a year on top.
The growth engine is the store count, and it is running. Chipotle opened 49 restaurants in the first quarter and is guiding to 350 to 370 new units for the year, against a long-term target of 7,000 restaurants in North America, with international expansion into Mexico, South Korea, and Singapore layered on top. Securing good real estate is the perennial constraint on this kind of growth; Texas Roadhouse, a peer pursuing its own unit expansion, names it directly, that one of its "biggest challenges in executing our growth strategy may be locating and securing an adequate supply of suitable new restaurant sites". Chipotle's brand strength and development capability are what let it keep opening high-volume stores where weaker concepts cannot, and each new restaurant at the company's target volumes adds disproportionately to profit.
The bull case is that the brand still has pricing power and engagement to reaccelerate the existing base while the new stores compound. Loyalty reached 32% of sales, up 300 basis points year over year, and the first quarter returned to transaction growth after a soft patch, with same-store sales turning slightly positive against expectations for a decline. Management has reaffirmed its long-term algorithm of roughly $4 million average unit volumes approaching 30% restaurant-level margins, framing the current margin pressure as temporary. If the comps stabilize and the unit count marches toward the long-term goal, the price, which the peer-multiple methods support at a premium restaurant multiple, has a runway. A debt-free, high-return, self-funding growth chain is exactly the kind of business that earns a premium and keeps it.
Bear Case
The structural truth a holder has to sit with is that the multiple is pricing growth that the comparable-store base is not currently delivering. At roughly 24 times operating income, the price implies company-wide operating growth near 20% a year for five years, a pace only about 37% of comparable fast-growers have sustained even that long, and it sits in the upper half of the restaurant peer range. Yet same-store sales were only about flat in the most recent quarter and are guided to stay about flat for the year. When a premium multiple meets stalling comps, the entire bet shifts onto new-unit growth, which is more capital-intensive, harder to sustain at scale, and slower to compound than same-store gains. The price assumes the growth keeps coming; the comps say the easy part of it has paused.
The margin pressure is the second crack, and it is not a one-quarter event. Restaurant-level margins have now declined for five consecutive quarters, squeezed by wage inflation, beef and freight costs, and tariff-driven supply pressure. Management calls the pressure temporary and points to its long-term margin algorithm, but five quarters is long enough that a skeptic should treat it as a trend until proven otherwise. The industry is feeling the same consumer caution; Darden, a large peer, reported a "5.2 percent decrease in same-restaurant guest counts offset by a 2.3 percent increase in average check", the tell-tale pattern of restaurants holding revenue by raising prices while traffic erodes. Chipotle has more pricing room than most, but a brand that leans on price to hold comps is borrowing from future traffic.
The valuation leaves no cushion for either problem. The asset-based, earnings-power, and growth-dependent cash-flow methods all land below the price; only the peer-multiple method, on a premium restaurant multiple, reaches it. That is the configuration of a stock priced for continued execution with nothing held back. The balance sheet is pristine, net cash and no debt, so the bear case is not financial risk; it is that a premium-multiple growth restaurant facing flat comps and persistent margin pressure has a long way to fall toward the levels the other methods imply if the unit-growth story stumbles, if international expansion proves slower or lower-margin than the domestic base, or if the consumer keeps trading down. Cheap this is not, and the burden of proof sits entirely on growth that has to reaccelerate.
Valuation
Chipotle's price is a bet on growth persistence, and working the price backward states the size of it: at roughly 24 times operating income, the price implies company-wide operating growth near 20% a year for five years. The company's recent pace has been within that rate, so the stretch is the duration, the assumption that a chain already past $12 billion in revenue keeps compounding at that clip while same-store sales sit about flat. That is the central question the valuation poses, and it is a real one.
The method families line up the way they do for a premium growth name. The peer-multiple methods, anchored on a restaurant-sector earnings multiple near 28 times, reach the price; the market is paying Chipotle a premium-but-not-absurd multiple for its category. The asset-based and earnings-power methods land well below, but those lenses are nearly uninformative here: Chipotle's book value per share is tiny because the asset-light, buyback-heavy model keeps almost no equity on the balance sheet, which inflates return-on-equity and deflates book-based fair values to the point of distortion. The growth-dependent cash-flow methods also land below the price, because they credit only mid-single-digit growth forward rather than the high-teens the price assumes. The honest read is that the price is supported by the peer multiple and demanding on everything else, which is to say it is a growth premium that the cohort comparison defends and the absolute methods do not.
Solvency is a strength that bounds the downside without making the stock cheap. Chipotle holds roughly $871 million of net cash and no debt, so it funds its entire expansion internally and still buys back stock, shrinking the share count about 2% a year. There is no leverage risk and no dilution working against holders; the capital structure is as clean as a growth company's gets. The decisive variable is unit growth and margin recovery, not the balance sheet. The price has chosen to believe the store count marches toward the long-term target and the restaurant margin returns to its algorithm; the valuation rests on that execution, and the premium multiple is the price of admission to a business that has earned the benefit of the doubt but is now being asked to prove it again.
Catalysts
The comp trend is the catalyst the market watches most closely. The first quarter of 2026 brought same-store sales up about 0.5%, beating an expected decline and returning to transaction growth with traffic up 0.6%, on revenue of $3.09 billion, up 7.4% as new stores carried the top line. Management guides full-year comps to about flat with pricing of 1% to 2%, so the watch item is whether menu innovation and loyalty engagement can push comps durably positive rather than relying on the unit count alone.
Unit growth and margins are the structural catalysts. Chipotle is targeting 350 to 370 new restaurants in 2026 toward a long-term goal of 7,000 in North America, while expanding internationally into Mexico, South Korea, and Singapore, with a Middle East push delayed by geopolitical conditions. Against that, restaurant-level margins have declined for five straight quarters on wage, beef, and freight costs, which management frames as temporary while reaffirming its long-term algorithm of roughly $4 million average unit volumes approaching 30% margins. The pace of margin recovery is the swing factor on whether the unit growth translates into the profit growth the price assumes.
Engagement and sentiment round out the picture. Loyalty sales reached 32% of total, up 300 basis points year over year, with loyalty comps outpacing non-loyalty for several quarters, which is the lever management is pulling to reaccelerate traffic. Analyst targets span roughly $35 to $53 with a median near $45, above the current price and reflecting confidence in the unit-growth machine under CEO Scott Boatwright's growth strategy. The next earnings prints, read for comps and restaurant margin together, are the events that confirm or undermine the premium.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- SBUX (Starbucks Corporation)
- (no filing in the citation store)
- QSR (RESTAURANT BRANDS INTERNATIONAL INC.)
- (no filing in the citation store)
- YUM (YUM! BRANDS, INC.)
- (no filing in the citation store)
- MCD (McDONALD’S CORPORATION)
- (no filing in the citation store)
- WEN (Wendy's Co)
- (no filing in the citation store)
- YUMC (Yum China Holdings, Inc.)
- (no filing in the citation store)
- TXRH (Texas Roadhouse, Inc.)
- (no filing in the citation store)
- DRI (DARDEN RESTAURANTS, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release · company FY2026 guidance and earnings call · Q1 2026 earnings call · analyst notes, 2026