DCF Studio

    CMG · NYQ · Consumer Cyclical

    Chipotle Mexican Grill, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 19.54

    Market price

    USD 33.43

    Implied upside

    -41.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 5.5% of revenue against depreciation of 3.1%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 19.54-41.6%
    Exit multiple
    USD 40.32+20.6%
    Market price
    USD 33.43

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 13.3bnUSD 14.8bnUSD 16.5bnUSD 18.3bnUSD 20.4bn+11.4%
    EBITUSD 2.2bnUSD 2.4bnUSD 2.7bnUSD 3.0bnUSD 3.3bn+11.4%
    NOPATUSD 1.7bnUSD 1.9bnUSD 2.1bnUSD 2.4bnUSD 2.6bn+11.4%
    Add depreciation & amortisationUSD 416.6mUSD 464.0mUSD 516.7mUSD 575.4mUSD 640.8m+11.4%
    Less capital expenditureUSD -732.6mUSD -815.8mUSD -908.5mUSD -1.0bnUSD -1.1bn+11.4%
    Less increase in working capitalUSD 104.4mUSD 116.3mUSD 129.5mUSD 144.2mUSD 160.6m-11.4%
    Free cashflow to firmUSD 1.5bnUSD 1.7bnUSD 1.9bnUSD 2.1bnUSD 2.3bn+11.4%
    Discount factor0.95450.86960.79230.72190.6577-
    Present valueUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bn+1.5%
    Present Value Of The ForecastUSD 7.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.958Reported 0.937, pulled toward 1.0 (Blume)
    Cost of equity10.27%Risk-free + beta x equity risk premium
    Cost of debt7.00%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationUSD 42.3bn89.3% of capital
    Total debtUSD 5.1bn10.7% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.76%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 19.54

    76% of EV

    Forecast FCFF, final year
    USD 2.3bn
    Capex at depreciation, working capital in reinvestment
    USD 2.6bn
    Less reinvestment at g/ROIC (5.9% of NOPAT)
    USD -154.2m
    Capitalised
    USD 2.5bn
    ROIC (reported)
    42.5%
    Terminal value, undiscounted
    USD 34.9bn
    Terminal value, discounted
    USD 22.9bn
    Enterprise value
    USD 30.3bn
    Less net debt
    USD 4.0bn
    Equity value
    USD 26.2bn

    Exit at 19.5x EBITDA

    Value per shareUSD 40.32

    87% of EV

    Terminal value, undiscounted
    USD 77.3bn
    Terminal value, discounted
    USD 50.8bn
    Enterprise value
    USD 58.2bn
    Less net debt
    USD 4.0bn
    Equity value
    USD 54.1bn

    Spread between methods: 69%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.76%24.5626.2828.3230.8033.85
    8.76%20.6521.8423.2224.8426.77
    9.76%17.6918.5619.5420.6621.96
    10.76%15.3816.0316.7417.5618.48
    11.76%13.5214.0214.5615.1715.84

    Outlined: this model. Green text: above today's price of 33.43. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year11.4%23.3%+12.0pp
    EBIT margin16.2%25.9%+9.7pp
    Discount rate9.8%7.0%-2.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.