| Stock (Symbol) | Stock Price | |
Chipotle (CMG) |
$324 |
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| Data is as of | Expected to Report | Sector |
February 11, 2013 |
Apr 22 |
Retail & Restaurant |
| Sharek’s Take | ||
 Last quarter Chipotle stocks was down and I said I was “holding it for now because the current 25 P/E is low by historic standards and that P/E could go to 35 next year“. Now CMG’s gone from $265 to $324 — up 22% — and the P/E is 32. This stock is high, and I feel growth is slowing. Store openings aren’t going to provide the impact as they did in years past (180 openings in 2012, 165-180 in 2013). Also, Chipotle’s are now covering a lot in the U.S, so these new stores might not bring great sales. There’s a new Chipotle by my office, and I feel this is a poor location with little traffic. I wouldn’t have opened a restaurant there, no way. There’s ample room for growth overseas where CMG only has a handful of stores, but International expansion isn’t on the menu just yet. |
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| One-Year Chart | ||
 Profit growth was only 8% last quarter, and 8% growth is expected the next two quarters. With a 32 P/E, CMG isn’t a good buy here. The only near-term momentum I foresee would be potential for a price increase (3% increase might rise EPS 9%). |
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| Earnings Table | ||
 Sales increased 17% last quarter, which is solid. That kind of sales growth can produce 20% profit growth. But, it didn’t. CMG had only 8% profit growth. Same store sales rose 4%, down from 8% 2QtrsAgo.
Chipotle also missed estimates last quarter, after lowering a quarter earlier. I’m happy we got a bump in the stock the last three months, the fundamentals show the stock didn’t deserve it. Annual Profit Estimates continue down, but the rate of deterioration has slowed (I tried to put a positive spin on it). Quarterly profit growth looks poor for the next six months. |
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| Fair Value | ||
 I think this stock is worth 25 times earnings. CMG is overvalued. It could be this price in late 2014, 18 months from now. |
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| Ten-Year Chart | ||
 CMG has been a great stock to own since going public, but notice profits were $1.28 in 2006 and are expected to be $10.26 this year. That’s strong profit growth. Growth is expected to be only 17% this year. If the company raises prices, then maybe 25% growth could be had. With a 32 P/E this stock is high. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
N/A |
Chipotle isn’t growing profits like it used to, and with locations covering the U.S., the company may have entered a slower growth phase. I’m grateful for the stock’s rise the last three months and will use the strength to sell here.
Chipotle will be sold from the Growth Portfolio today. It was fun while it lasted. |
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Aggressive Growth Portfolio
N/A |
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