Cipotle (CMG) is in a zone right now. Same store sales (which compares the year-over-year sales growth within the group of stores that have been open a year or more) rose 20% last quarter. This helped profits surge 56% on “only” a 31% increase in sales. Sales growth accelerated for the 4th straight quarter, up from 29%, 24%, 21% and 18% the prior quarters.
The stock’s on a roll, and what’s better now is CMG’s P/E on 2015 earnings estimates, its “just” 36. In 2014 Q1 it was 43, Q2 40 and Q3 49. My problem with the stock recently is that the P/E was always too high. Now the stock is buyable again.
On negative is these sizzling same-store sales numbers won’t stay this high. Management said its sees sss rising in the low-to-mid single digits next year. But I think they are just underestimating to overdeliver.
One Year Chart
Here’s the one-year chart of the stock. Still looks like its high, right?
Profit growth was 56% last quarter and estimates show 49% and 41% coming the next 2 qtrs. 3QtrsOut the estimate is 29%.
For the first time in a while, CMG isn’t too high to buy. So let’s look at what the stock’s Fair Value is.
Fair Value
So now you can buy CMG for what it’s 2015 Fair Value is. But still, it’s not on sale. Upside to 2016 is a modest 22%, but that’s more than a year out.
Sharek’s Take
Chipotle is at a decent price to buy in at, but I think the best course of action is to wait for another stock market correction and try to get the stock at a discount. CMG stays on my radar for now.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
