Intrinsic value of Chipotle Mexican Grill, Inc. - CMG

Previous Close

$655.80

  Intrinsic Value

$106.09

stock screener

  Rating & Target

str. sell

-84%

Previous close

$655.80

 
Intrinsic value

$106.09

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of CMG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 18.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.40
  9.86
  9.37
  8.94
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
Revenue, $m
  5,371
  5,901
  6,454
  7,030
  7,631
  8,256
  8,906
  9,581
  10,283
  11,012
  11,770
  12,558
  13,377
  14,230
  15,117
  16,041
  17,003
  18,007
  19,053
  20,145
  21,284
  22,474
  23,717
  25,017
  26,375
  27,796
  29,283
  30,839
  32,468
  34,174
Variable operating expenses, $m
  5,048
  5,546
  6,066
  6,608
  7,172
  7,759
  8,369
  9,004
  9,663
  10,348
  11,058
  11,799
  12,568
  13,369
  14,203
  15,071
  15,975
  16,918
  17,901
  18,927
  19,997
  21,115
  22,283
  23,504
  24,781
  26,116
  27,513
  28,975
  30,505
  32,108
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  5,048
  5,546
  6,066
  6,608
  7,172
  7,759
  8,369
  9,004
  9,663
  10,348
  11,058
  11,799
  12,568
  13,369
  14,203
  15,071
  15,975
  16,918
  17,901
  18,927
  19,997
  21,115
  22,283
  23,504
  24,781
  26,116
  27,513
  28,975
  30,505
  32,108
Operating income, $m
  322
  355
  388
  423
  459
  497
  536
  577
  619
  663
  712
  759
  809
  860
  914
  970
  1,028
  1,089
  1,152
  1,218
  1,287
  1,359
  1,434
  1,512
  1,594
  1,680
  1,770
  1,864
  1,963
  2,066
EBITDA, $m
  547
  601
  658
  717
  778
  841
  908
  977
  1,048
  1,122
  1,200
  1,280
  1,363
  1,450
  1,541
  1,635
  1,733
  1,835
  1,942
  2,053
  2,169
  2,291
  2,417
  2,550
  2,688
  2,833
  2,985
  3,143
  3,309
  3,483
Interest expense (income), $m
  0
  0
  5
  9
  14
  20
  25
  31
  37
  43
  49
  56
  63
  70
  78
  86
  94
  102
  111
  120
  130
  140
  150
  161
  172
  184
  197
  210
  223
  237
  252
Earnings before tax, $m
  322
  350
  379
  408
  439
  472
  505
  540
  576
  614
  655
  696
  738
  782
  828
  876
  926
  978
  1,032
  1,088
  1,147
  1,209
  1,273
  1,340
  1,410
  1,484
  1,561
  1,641
  1,725
  1,814
Tax expense, $m
  87
  94
  102
  110
  119
  127
  136
  146
  156
  166
  177
  188
  199
  211
  224
  237
  250
  264
  279
  294
  310
  326
  344
  362
  381
  401
  421
  443
  466
  490
Net income, $m
  235
  255
  276
  298
  321
  344
  369
  394
  421
  448
  478
  508
  539
  571
  605
  639
  676
  714
  753
  794
  837
  882
  929
  978
  1,029
  1,083
  1,139
  1,198
  1,260
  1,324

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,218
  2,436
  2,665
  2,903
  3,151
  3,409
  3,677
  3,956
  4,246
  4,547
  4,860
  5,185
  5,523
  5,875
  6,241
  6,623
  7,020
  7,435
  7,867
  8,317
  8,788
  9,279
  9,792
  10,329
  10,890
  11,477
  12,090
  12,733
  13,406
  14,110
Adjusted assets (=assets-cash), $m
  2,218
  2,436
  2,665
  2,903
  3,151
  3,409
  3,677
  3,956
  4,246
  4,547
  4,860
  5,185
  5,523
  5,875
  6,241
  6,623
  7,020
  7,435
  7,867
  8,317
  8,788
  9,279
  9,792
  10,329
  10,890
  11,477
  12,090
  12,733
  13,406
  14,110
Revenue / Adjusted assets
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
  2.422
Average production assets, $m
  1,515
  1,664
  1,820
  1,983
  2,152
  2,328
  2,511
  2,702
  2,900
  3,105
  3,319
  3,541
  3,772
  4,013
  4,263
  4,524
  4,795
  5,078
  5,373
  5,681
  6,002
  6,338
  6,688
  7,055
  7,438
  7,839
  8,258
  8,697
  9,156
  9,637
Working capital, $m
  -376
  -413
  -452
  -492
  -534
  -578
  -623
  -671
  -720
  -771
  -824
  -879
  -936
  -996
  -1,058
  -1,123
  -1,190
  -1,260
  -1,334
  -1,410
  -1,490
  -1,573
  -1,660
  -1,751
  -1,846
  -1,946
  -2,050
  -2,159
  -2,273
  -2,392
Total debt, $m
  85
  175
  268
  366
  468
  573
  683
  798
  916
  1,040
  1,168
  1,302
  1,440
  1,585
  1,735
  1,891
  2,054
  2,224
  2,401
  2,586
  2,779
  2,980
  3,191
  3,411
  3,641
  3,881
  4,133
  4,396
  4,672
  4,961
Total liabilities, $m
  909
  999
  1,092
  1,190
  1,292
  1,398
  1,508
  1,622
  1,741
  1,864
  1,992
  2,126
  2,265
  2,409
  2,559
  2,715
  2,878
  3,048
  3,225
  3,410
  3,603
  3,804
  4,015
  4,235
  4,465
  4,705
  4,957
  5,220
  5,496
  5,785
Total equity, $m
  1,308
  1,437
  1,572
  1,713
  1,859
  2,011
  2,169
  2,334
  2,505
  2,682
  2,867
  3,059
  3,259
  3,466
  3,682
  3,908
  4,142
  4,386
  4,641
  4,907
  5,185
  5,475
  5,778
  6,094
  6,425
  6,771
  7,133
  7,512
  7,909
  8,325
Total liabilities and equity, $m
  2,217
  2,436
  2,664
  2,903
  3,151
  3,409
  3,677
  3,956
  4,246
  4,546
  4,859
  5,185
  5,524
  5,875
  6,241
  6,623
  7,020
  7,434
  7,866
  8,317
  8,788
  9,279
  9,793
  10,329
  10,890
  11,476
  12,090
  12,732
  13,405
  14,110
Debt-to-equity ratio
  0.060
  0.120
  0.170
  0.210
  0.250
  0.290
  0.320
  0.340
  0.370
  0.390
  0.410
  0.430
  0.440
  0.460
  0.470
  0.480
  0.500
  0.510
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.570
  0.570
  0.580
  0.590
  0.590
  0.600
Adjusted equity ratio
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  235
  255
  276
  298
  321
  344
  369
  394
  421
  448
  478
  508
  539
  571
  605
  639
  676
  714
  753
  794
  837
  882
  929
  978
  1,029
  1,083
  1,139
  1,198
  1,260
  1,324
Depreciation, amort., depletion, $m
  225
  247
  270
  294
  319
  345
  372
  400
  429
  459
  488
  521
  555
  590
  627
  665
  705
  747
  790
  835
  883
  932
  984
  1,037
  1,094
  1,153
  1,214
  1,279
  1,346
  1,417
Funds from operations, $m
  460
  502
  546
  592
  639
  689
  740
  794
  849
  907
  967
  1,029
  1,094
  1,161
  1,232
  1,305
  1,381
  1,460
  1,543
  1,630
  1,720
  1,814
  1,913
  2,016
  2,123
  2,236
  2,354
  2,477
  2,606
  2,741
Change in working capital, $m
  -35
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -119
Cash from operations, $m
  496
  539
  585
  632
  681
  733
  786
  841
  898
  958
  1,020
  1,084
  1,151
  1,221
  1,294
  1,369
  1,448
  1,531
  1,617
  1,706
  1,800
  1,898
  2,000
  2,107
  2,218
  2,335
  2,458
  2,586
  2,720
  2,861
Maintenance CAPEX, $m
  -201
  -223
  -245
  -268
  -292
  -316
  -342
  -369
  -397
  -426
  -457
  -488
  -521
  -555
  -590
  -627
  -665
  -705
  -747
  -790
  -835
  -883
  -932
  -984
  -1,037
  -1,094
  -1,153
  -1,214
  -1,279
  -1,346
New CAPEX, $m
  -145
  -149
  -156
  -163
  -169
  -176
  -183
  -190
  -198
  -206
  -214
  -222
  -231
  -240
  -250
  -261
  -271
  -283
  -295
  -308
  -321
  -336
  -351
  -366
  -383
  -401
  -419
  -439
  -459
  -481
Cash from investing activities, $m
  -346
  -372
  -401
  -431
  -461
  -492
  -525
  -559
  -595
  -632
  -671
  -710
  -752
  -795
  -840
  -888
  -936
  -988
  -1,042
  -1,098
  -1,156
  -1,219
  -1,283
  -1,350
  -1,420
  -1,495
  -1,572
  -1,653
  -1,738
  -1,827
Free cash flow, $m
  149
  167
  184
  202
  221
  240
  260
  281
  303
  326
  349
  374
  399
  426
  453
  482
  512
  543
  575
  608
  643
  679
  717
  757
  798
  841
  886
  933
  982
  1,033
Issuance/(repayment) of debt, $m
  85
  90
  94
  98
  102
  106
  110
  114
  119
  123
  128
  133
  139
  144
  150
  156
  163
  170
  177
  185
  193
  201
  210
  220
  230
  241
  252
  263
  276
  289
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  85
  90
  94
  98
  102
  106
  110
  114
  119
  123
  128
  133
  139
  144
  150
  156
  163
  170
  177
  185
  193
  201
  210
  220
  230
  241
  252
  263
  276
  289
Total cash flow (excl. dividends), $m
  235
  257
  278
  300
  322
  346
  370
  396
  422
  450
  477
  507
  538
  570
  604
  638
  675
  712
  752
  793
  836
  881
  928
  977
  1,028
  1,081
  1,137
  1,196
  1,257
  1,322
Retained Cash Flow (-), $m
  -124
  -129
  -135
  -140
  -146
  -152
  -158
  -165
  -171
  -178
  -185
  -192
  -200
  -208
  -216
  -225
  -234
  -244
  -255
  -266
  -278
  -290
  -303
  -317
  -331
  -346
  -362
  -379
  -397
  -416
Prev. year cash balance distribution, $m
  257
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  367
  128
  143
  159
  176
  193
  212
  231
  251
  272
  293
  315
  338
  362
  387
  413
  440
  468
  497
  527
  558
  591
  625
  660
  697
  735
  775
  817
  861
  906
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  352
  117
  125
  131
  136
  140
  143
  144
  144
  143
  139
  135
  129
  122
  114
  105
  96
  86
  77
  67
  58
  49
  41
  34
  27
  21
  17
  13
  9
  7
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Chipotle Mexican Grill, Inc. (Chipotle), together with its subsidiaries, operates Chipotle Mexican Grill restaurants. The Company's Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. As of December 31, 2016, the Company managed its operations and restaurants based on 11 regions. As of December 31, 2016, the Company operated 2,198 Chipotle restaurants throughout the United States, as well as 29 international Chipotle restaurants, and it also had 23 restaurants in operation in other non-Chipotle concepts. As of December 31, 2016, 29 of its restaurants were located outside of the United States, with 17 in Canada, six in the United Kingdom, five in France and one in Frankfurt, Germany. The Company sells gift cards, which do not have an expiration date. The Company categorizes its restaurants as end-caps (at the end of a line of retail outlets), in-lines (in a line of retail outlets), free-standing or other.

FINANCIAL RATIOS  of  Chipotle Mexican Grill, Inc. (CMG)

Valuation Ratios
P/E Ratio 821.5
Price to Sales 4.8
Price to Book 13.5
Price to Tangible Book
Price to Cash Flow 54.1
Price to Free Cash Flow 209.9
Growth Rates
Sales Growth Rate -13.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0.8%
Cap. Spend. - 3 Yr. Gr. Rate 5.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 12.9%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 16.5%
Return On Equity 1.3%
Return On Equity - 3 Yr. Avg. 16.5%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 20.3%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin 4.7%
EBITDA Margin - 3 Yr. Avg. 14.9%
Operating Margin 0.9%
Oper. Margin - 3 Yr. Avg. 11.7%
Pre-Tax Margin 1%
Pre-Tax Margin - 3 Yr. Avg. 11.8%
Net Profit Margin 0.6%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 41%
Eff/ Tax Rate - 3 Yr. Avg. 39%
Payout Ratio 0%

CMG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMG stock intrinsic value calculation we used $4865 million for the last fiscal year's total revenue generated by Chipotle Mexican Grill, Inc.. The default revenue input number comes from 0001 income statement of Chipotle Mexican Grill, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CMG stock valuation model: a) initial revenue growth rate of 10.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CMG is calculated based on our internal credit rating of Chipotle Mexican Grill, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Chipotle Mexican Grill, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CMG stock the variable cost ratio is equal to 94%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CMG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Chipotle Mexican Grill, Inc..

Corporate tax rate of 27% is the nominal tax rate for Chipotle Mexican Grill, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CMG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CMG are equal to 28.2%.

Life of production assets of 6.8 years is the average useful life of capital assets used in Chipotle Mexican Grill, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CMG is equal to -7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1441.339 million for Chipotle Mexican Grill, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 27.653 million for Chipotle Mexican Grill, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Chipotle Mexican Grill, Inc. at the current share price and the inputted number of shares is $18.1 billion.

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