Forbes contributors publish independent expert analyses and insights.
Chipotle Mexican Grill (NYSE: CMG) has declined 15% year-to-date, most notably underperforming the S&P 500's modest 1% gain. In the first quarter, revenue increased 6% to $2.88 billion, while adjusted EPS increased 7% to $0.29. Nevertheless, comparable-restaurant sales fell 0.4%, mainly due to a 2.3% decrease in transactions, even with a 1.9% rise in average check size. Operating margins compressed by 130 basis points to 26.2%, impacted by rising food and labor expenses, as well as larger portion sizes. Additional challenges include a projected 50-basis-point margin effect from tariffs. Looking forward, Chipotle forecasts a challenging second quarter because of difficult comparisons against last year's 11.1% comp growth and the timing of a late Easter. For the full-year 2025, the company expects low single-digit comparable sales growth, with traffic anticipated to become positive in the second half.
That being said, CMG stock seems expensive at its current value of approximately $51. Although the operational performance remains strong, minor concerns and high valuation levels indicate limited upside. See Buy or Sell Chipotle stock?
Our evaluation, based on Chipotle's historical and present financial status across key dimensions such as growth, profitability, financial stability, and resilience, supports a cautious position. For investors looking for more stable returns with less volatility, the Trefis High Quality Portfolio could provide an attractive alternative, having outperformed the S&P 500 with over 91% returns since inception.
How does Chipotle Mexican Grill's valuation look vs. the S&P 500?
Based on what you pay per dollar of sales or profit, CMG stock seems expensive compared to the overall market.
* Chipotle Mexican Grill has a price-to-sales (P/S) ratio of 6.1 versus a figure of 2.8 for the S&P 500
* Furthermore, the company's price-to-free cash flow (P/FCF) ratio is 32.6 compared to 17.6 for S&P 500
* Additionally, it presents a price-to-earnings (P/E) ratio of 44.7 versus the benchmark's 24.5
How have Chipotle Mexican Grill's revenues grown over recent years?
Chipotle Mexican Grill's Revenues have experienced significant growth over recent years.
Chipotle Mexican Grill's profit margins are around the median level for companies in the Trefis coverage universe.
* Chipotle Mexican Grill's Debt figure was $4.5 Bil at the close of the most recent quarter, while its market capitalization stands at $70 Bil (as of 5/20/2025). This suggests a strong Debt-to-Equity Ratio of 6.6% (compared to 21.5% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
* Cash (including cash equivalents) constitutes $1.4 Bil of the $9.0 Bil in Total Assets for Chipotle Mexican Grill. This leads to a strong Cash-to-Assets Ratio of 15.5% (compared to 15.0% for S&P 500)
How resilient is CMG stock during a downturn?
CMG stock has experienced an impact that was slightly better than the S&P 500 index during certain recent downturns. While investors hope for a soft landing of the U.S. economy, how severe could the situation become if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and following the last six market crashes.
Putting all the pieces together: What it means for CMG stock
In summary, Chipotle Mexican Grill's performance according to the parameters outlined above is as follows:
The high valuation of CMG stock restricts its upside potential in the near-to-mid term. As an alternative, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to deliver robust returns for investors. What accounts for this? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks offers a flexible approach to capitalize on favorable market conditions while mitigating losses when the markets decline, as elaborated in RV Portfolio performance metrics