I think it's reasonable to assume that Chipotle's current P/E ratio will compress as the company matures. With a profit margin of 15%, up substantially from a trailing 10-year peak of 10.8%, and $21 billion in estimated company sales, this equates to $3.2 billion in profit in 2032. To be fair, Chipotle does have a bigger growth opportunity than these peers, but that's not enough to justify the valuation.Įven if the business can somehow manage to open 400 stores per year over the next decade to reach the 7,000 mark in North America, an annual pace that hasn't been achieved in Chipotle's history, while at the same time hitting $3 million in AUV, the stock still looks expensive. This valuation means that shares are more expensive than other popular restaurant stocks, like McDonald's, Domino's Pizza, and Starbucks. The stock looks expensiveĪs things stand today, Chipotle's stock sells for a price-to-earnings (P/E) multiple of 57. Even so, don't rush to buy the stock just yet. That's quite a bullish outlook for a business that has already demonstrated tremendous success. Furthermore, they believe each store could pull in at least $3 million in annual unit volume (AUV), up from just over $2.7 million today, with the expectation that this could move even higher over time. Management thinks that there could one day be 7,000 Chipotle locations in North America, up from 3,052 today.
Nonetheless, the long-term outlook for the business remains as robust as ever.
0 kommentar(er)
