| Stock (Symbol) | Stock Price | |
Chipotle (CMG) |
$371 |
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| Data is as of | Expected to Report | Sector |
February 8, 2012 |
Apr 20 |
Retail & Restaurant |
| Sharek’s Take | ||
 Chipotle is fairly valued — yet the stock keeps climbing. I’ve always said high same store sales is the top factor in a retail stock moving up. Chipotle has had double-digit same store sales growth for the last year and the stock’s gone up around 50%. Here’s a run-down of the same store sales figures the apast four qtrs:
2011 Q4 11% What to do now? I’m not a buyer of this stock, nor am I a seller. If CMG has a poor quarter then the stock could fall from $370 to $300. Why has CMG been rising the past quarter? The P/E a year ago was 42. Last quarter it was 37. During the past quarter the market’s pushed the stock up so the P/E is 43. Yes, CMG is a high-flyer, but to say the stock has peaked or is bound to fall is a bet I wouldn’t make. Same-stores sales rising in the double-digits is an indicator of a top retail stock. CMG is part of the Growth Portfolio. |
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| One-Year Chart | ||
 The one-year chart shows the 50% move in the last year. All done with profits growing only 21% in 2011. If CMG can sell for 43 times earnings through all of that, then the stock should be good with 31% and 36% profit growth scheduled the next two quarters. The problem is I don’t see the P/E expanding, so the only stock appreciation would be from Annual Profit Estimates increasing. |
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| Earnings Table | ||
 Profits grew 23% last quarter. Sales increased 24% the past two quarters. Same-store sales growth has been 11% LastQtr, 11% 2QtrsAgo, 10% 3QtrsAgo, 12% 4QtrsAgo.
CMG only beat by a penny, the stock sold off on the news but has now recovered. Annual Profit Estimates increased slightly. This stock doesn’t have much upside unless 2012 estimates increase. In fact, the stock’s upside is capped by whatever increase 2012 estimates get: 10% rise in estimates = 10% upside potential. |
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| Fair Value | ||
 CMG is really only worth 35 times earnings. Its overvalued when you take a step back. |
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| Ten-Year Chart | ||
 Chipotle is extended in the ten-year chart. The last time the stock had a wicked fall was when business momentum slowed and the P/E got whacked. Yes that can happen again, but it probably won’t with double digit sales growth happening. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
18 of 20 |
This stock has great momentum but really no upside. Numbers are great but the valuation is as high as it’s probably going to get. The only thing I see keeping the stock climbing is great same store sales growth causing 2012 estimates to rise and short sellers having to cover.
CMG is ranked 18th in the 20 stock Growth Portfolio Power Rankings. CMG is not in the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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