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1. Company Snapshot

1.a. Company Description

Chipotle Mexican Grill, Inc., together with its subsidiaries, owns and operates Chipotle Mexican Grill restaurants.As of February 15, 2022, it owned and operated approximately 3,000 restaurants in the United States, Canada, the United Kingdom, France, Germany, and rest of Europe.The company was founded in 1993 and is headquartered in Newport Beach, California.

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1.b. Last Insights on CMG

Chipotle Mexican Grill's recent performance was negatively impacted by weak comp sales, margin pressures, and cautious consumer sentiment. The company's Q3 earnings beat forecasts, but revenues fell short, leading to a sharp post-earnings decline. Analysts have slashed their forecasts, citing concerns over affordability and signs of a weakened US consumer. Despite this, Chipotle maintains strong margins and is innovating with marketing, menu, and operational efficiency to support a gradual recovery. Some investors are buying the dip, with Baltimore Washington Financial Advisors Inc. raising its stake by 5.7%.

1.c. Company Highlights

2. Chipotle's Q3 2025 Earnings: A Mixed Bag

Chipotle Mexican Grill's third-quarter 2025 financial performance was marked by a 7.5% increase in sales to $3 billion, with a modest 0.3% comp sales growth. Restaurant-level margin declined 100 basis points year-over-year to 24.5%. Adjusted diluted EPS was $0.29, a 7% increase over last year, beating analyst estimates of $0.2857. The company's digital sales continued to grow, making up 36.7% of total sales.

Publication Date: Oct -31

📋 Highlights
  • Sales Growth & Comp Sales:: Q3 sales rose 7.5% to $3 billion, with 0.3% comparable sales growth driven by digital sales (36.7% of total).
  • Margin Pressure:: Restaurant-level margin declined 100 basis points to 24.5%, impacted by inflation and rising beef costs (COGS 30%, up 60 bps YoY).
  • EPS Performance:: Adjusted diluted EPS increased 7% to $0.29, outperforming GAAP EPS growth of 4% amid inflationary challenges.
  • Consumer Shifts:: 40% of sales from households <$100k face frequency declines; Chipotle prioritizes value communication and loyalty program upgrades.
  • Capital Allocation:: $687M stock repurchased in Q3 (avg. $42.39/share), with $1.8B cash reserves and no debt, supporting long-term growth initiatives.

Operational Challenges and Strategic Initiatives

The company faced challenges, particularly among lower- to middle-income consumers, who reduced their frequency due to economic concerns. To address this, Chipotle is reemphasizing quality standards, retraining staff, and resetting quarterly bonus incentives to improve digital order accuracy and the overall guest experience. The company is also investing in marketing and menu innovation, including the rollout of new menu items like Red Chimichurri, which drove a step-up in transactions and accelerated trial of carne asada.

Pricing Strategy and Inflation

Chipotle plans to take a slow and measured approach to pricing in 2026 due to elevated inflation and consumer uncertainty. With inflation accelerating into the mid-single-digit range, primarily due to tariffs and rising beef costs, the company does not plan to fully offset this incremental inflation in the near term, potentially pressuring margins. As Scott Boatwright noted, "We don't plan to fully offset inflation in 2026, which will pressure margins in the near term. However, we believe this is the right approach for our guests and will increase our value proposition."

Valuation and Growth Prospects

With a current P/E Ratio of 28.26 and an expected revenue growth rate of 11.5% next year, Chipotle's valuation appears to be reasonable. The company's ROE of 44.23% and ROIC of 17.48% indicate strong profitability. However, the stock is trading at a 20% to 30% discount to its fast-casual peers, suggesting that the market may not fully appreciate Chipotle's value proposition. Analysts expect the company to drive mid-single-digit comp growth in 2026, driven by operational improvements, digital initiatives, and marketing efforts.

Outlook and Conclusion

Chipotle's core value proposition remains intact, and the company's business fundamentals are strong. Despite a consumer slowdown, the company is confident in its ability to adapt and drive growth. With a focus on delivering value and emerging stronger, Chipotle is well-positioned to drive long-term growth and profitability.

3. NewsRoom

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Chipotle Recalibrates Pricing Playbook as Inflation Pressures Build Up

Dec -04

Source: zacks.com

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Chipotle: Huge Turnaround Opportunity Vs. Demise Of A Great Brand

Dec -04

Source: seekingalpha.com

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INTRODUCING "BÉIS X CHIPOTLE: THE TO GO COLLECTION," AN 11-PIECE TRAVEL CAPSULE BRINGING REAL FOOD AND FUNCTION WHEREVER FANS GO

Dec -04

Source: prnewswire.com

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Has Chipotle Mexican Grill (CMG) Stock Been Good for Investors?

Dec -04

Source: fool.com

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Wingstop Expands Through Consumer Weakness While Chipotle Fights Margin Compression

Dec -03

Source: 247wallst.com

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CMG Stock Down 35% in 6 Months: Buy the Dip or Brace for More Pain?

Dec -03

Source:

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CHIPOTLE MEXICAN GRILL TO ANNOUNCE FOURTH QUARTER AND FULL YEAR 2025 RESULTS ON FEBRUARY 3, 2026

Dec -02

Source: prnewswire.com

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I Name CEO Starbucks CEO Brian Niccol "Worst CEO of 2025"

Dec -02

Source: 247wallst.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.80%)

6. Segments

Restaurants

Expected Growth: 8.0%

The restaurants segment is expected to grow at a rate of 8%, driven by continued expansion of Chipotle's store base, same-store sales growth, and increasing demand for convenient, high-quality food. Chipotle's strong brand and menu innovation are expected to drive customer loyalty and retention.

7. Detailed Products

Burritos

A large flour tortilla wrapped around a filling of meat, rice, beans, cheese, and vegetables

Bowls

A bowl filled with a choice of meat, rice, beans, cheese, and vegetables, without the tortilla

Tacos

A crispy or soft shell filled with a choice of meat, cheese, and vegetables

Salads

A bed of lettuce topped with a choice of meat, cheese, and vegetables

Chips and Guacamole

A side of crispy tortilla chips served with a creamy guacamole dip

Sofritas

A vegetarian option made with organic tofu, roasted with spices and herbs

Quesadillas

A flour tortilla filled with cheese (and optional meat or vegetables) and cooked until crispy and melted

Kids Meals

A smaller portion of a burrito, bowl, or tacos, designed for children

8. Chipotle Mexican Grill, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

While there are some substitutes for Chipotle's Mexican-inspired food, such as other fast-casual restaurants or cooking at home, the company's strong brand and high-quality ingredients help to differentiate it from competitors.

Bargaining Power Of Customers

Individual customers have limited bargaining power due to Chipotle's large customer base and lack of dependence on a single customer or group of customers.

Bargaining Power Of Suppliers

Chipotle has a diverse supplier base and is not heavily dependent on a single supplier, reducing the bargaining power of suppliers.

Threat Of New Entrants

While there are some barriers to entry in the fast-casual restaurant industry, such as high startup costs and the need for a strong brand, new entrants can still pose a threat to Chipotle's market share.

Intensity Of Rivalry

The fast-casual restaurant industry is highly competitive, with many established players and new entrants vying for market share, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 56.95%
Debt Cost 3.95%
Equity Weight 43.05%
Equity Cost 10.26%
WACC 6.66%
Leverage 132.31%

11. Quality Control: Chipotle Mexican Grill, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Booking

A-Score: 6.3/10

Value: 3.8

Growth: 8.7

Quality: 8.0

Yield: 1.0

Momentum: 7.5

Volatility: 8.7

1-Year Total Return ->

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Yum!

A-Score: 5.9/10

Value: 4.0

Growth: 4.8

Quality: 6.4

Yield: 4.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

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PulteGroup

A-Score: 5.8/10

Value: 5.9

Growth: 8.8

Quality: 7.6

Yield: 2.0

Momentum: 4.0

Volatility: 6.3

1-Year Total Return ->

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McDonald's

A-Score: 5.5/10

Value: 3.6

Growth: 4.8

Quality: 6.5

Yield: 4.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

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Starbucks

A-Score: 4.8/10

Value: 3.6

Growth: 5.6

Quality: 4.3

Yield: 5.0

Momentum: 3.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Chipotle Mexican Grill

A-Score: 3.9/10

Value: 2.2

Growth: 8.4

Quality: 5.7

Yield: 0.0

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

33.94$

Current Price

33.94$

Potential

-0.00%

Expected Cash-Flows