Will Chipotle’s Stock Rally Continue?

Will Chipotle’s Stock Rally Continue?

[Updated 02/16/2021] Chipotle Update

After rallying 82% since the end of 2019, Chipotle Mexican Grill (NYSE: CMG) has moderate upside in the near term. CMG's stock grew from $837 at the end of 2019 to near $1528 now, compared to the S&P 500 which gained 22% since the end of 2019. The company has seen revenue and earnings rising over recent years. Our dashboard 'Chipotle's Stock: 2007-08 vs. 2020 Crisis Comparison' has the underlying numbers.

During the Covid-19 crisis, CMG saw its revenue rise by 7% in 2020 as lockdowns forced the company to shut down dine-ins but was offset by a huge increase in digital sales. In FY 2020, CMG beat consensus estimates for revenue at $6 billion, up 7% y-o-y, and earnings per share recorded at $12.74 compared to $12.62 in the same period of the previous year. Further, the company reported $664 million of cash inflows from operating activities for the first nine months.

We expect Chipotle's revenues to rise by 21% to $7.2 billion for 2021. Further, its net income is likely to rise to $543 million, increasing its EPS figure to $19.64 in 2021, which coupled with the P/E multiple of around 83x will lead to Chipotle's valuation