Chipotle Mexican Grill CMG
Consumer Cyclical · Restaurants · Synthos Deep Dive · 2026-07-03
The Overview
Chipotle is the burrito chain. It runs about 4,100 restaurants it owns outright (no franchising in North America/Europe), and it makes good money doing it — roughly 13 cents of profit on every sales dollar, which is strong for a restaurant.
The problem: growth has stalled. Same-store sales — how much each existing restaurant sells versus a year ago — were basically flat last quarter (+0.5%), and rising costs for beef, freight and labor squeezed profits, so earnings per share actually fell versus a year ago. The stock has already dropped about 39% over the past year and 48% from its high, which tells you the market noticed.
Is it cheap or expensive? Still on the expensive side — you pay about 32 dollars for every 1 dollar of yearly profit, which is a price you only justify if fast growth comes back. Our verdict is Watch: a wonderful company going through a rough patch, not yet at a price that gives you a margin of safety.
Here's what our three scores mean in everyday terms:
- Downside Risk 6/10 (a bit elevated). It doesn't carry scary bank debt, but it's still priced for growth it isn't delivering right now, and the stock swings hard — it already fell nearly in half.
- Growth Quality 5/10 (middle). Excellent, high-return business — but growth has cooled and profit margins are shrinking this year.
- Exponential Potential 3/10 (low-ish). It can keep opening restaurants for years, but it's already big and mostly American; don't expect it to multiply from here.
The one big worry: if same-store sales stay flat or go negative while costs keep rising, the "premium growth stock" label comes off and the price could keep sliding.
Putting a number on it: our fair-value estimate is $38 against a current price of $38.03 — a premium price for a business we still like.
Our summary metrics
Debt-light on real borrowings but 32× trailing into flat comps, margin compression and a −48% drawdown.
~10% fwd rev / ~14% fwd EPS CAGR, but comps have gone flat and restaurant margins are compressing.
Unit growth is real yet decelerating; a $45B US-centric QSR is a compounder, not a multibagger.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
Unit growth is real yet decelerating; a $45B US-centric QSR is a compounder, not a multibagger.
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $42.94 (high $52 / low $36; 47 Buy · 20 Hold · 0 Sell) — context, not our anchor |
| Valuation | 32× trailing EPS · 31× FY26E · 26× FY27E · 16× FY30E · EV/S 4.2× · EV/EBITDA 22× |
| Technicals | Downtrend/basing — $35.38, −38% off 52-wk high, at 200-DMA, RSI 70, −39% 12-mo (SPY +21%) |
| Conviction | Low — 0 expert voices in KB; call rests entirely on fundamentals + quant |
| Position sizing | Satellite-only, 0–2% starter if at all; no core case at this multiple/cycle |
What the experts actually said 4 traceable claims on CMG · showing the highest-conviction voices
“Great fresh-food concept bought after ~50% drop on a recoverable food-safety issue; moat from farmer-sourcing relationships hard to replicate.”
“Salesforce, Adobe still grow earnings and Chipotle still makes money, but their multiples were set in a wrong environment; AI disruption drives multiple compression.”
Every claim reconciles to a real claim_id in the Synthos knowledge base — this is the evidence the verdict is built on, not vibes. Management (the company itself) is shown but half-weighted; one cautionary voice is included on purpose.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $38.03, 11% above the 50-day average ($34), 10% above the 200-day average ($35) — an uptrend. 10% below the 52-week high of $42, 35% above the 52-week low of $28.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $38.03 is currently inside the band (band $31–$39).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 64.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently above its signal line by 0.42, positive momentum.
Relative performance vs S&P 500 & its sector (XLY (sector)), set to 100 a year ago
Solid = CMG · dashed = S&P 500 · dotted = XLY (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Chipotle Mexican Grill (NYSE: CMG) is a fast-casual Mexican restaurant chain founded in 1993 and headquartered in Newport Beach, CA. Its defining structural feature: it owns and operates essentially all its restaurants in North America and Europe rather than franchising — the only company of its size to do so — which means it keeps the full restaurant-level margin but also carries all the operating and capex risk directly. As of Q1'26 there were over 4,100 restaurants across the US, Canada, UK, France, Germany and the Middle East. CEO Scott Boatwright; fiscal year ends December 31.
Revenue mix (FY2025, from filings):
- By product: Food & beverage $11.87B · delivery service $60M — i.e. this is a single-product, single-format business; there is no diversification cushion.
- By geography: US segment $11.68B (~98%) — the FMP segmentation reports only a US segment; international is still a rounding error today. This US concentration is the whole growth-runway debate (§4).
The strategic story management tells is its "Recipe for Growth": new-unit development (with drive-thru "Chipotlanes"), digital ordering (38.6% of sales), menu innovation, throughput, and a nascent international push via partner-operated (franchised) restaurants abroad.
2. The expert thesis — why the panel is bullish (traceable)
There is no expert coverage for CMG in the Synthos knowledge base. total_claims = 0; there are zero net-bullish voices and zero cautionary voices distilled for this name. There is therefore no conviction-track thesis to cite, and — per Synthos house standard — we will not manufacture one. Every number in this note is from the fundamental/quant data (FMP filings, estimates, price history) and management's own SEC filings.
What that means for the verdict. This call is explicitly fundamentals- and quant-driven. The absence of KB coverage is itself information: CMG is not a name our expert panel is actively championing or warning against, so it earns neither a conviction upgrade nor a conviction-flag downgrade. It stands or falls on the numbers below — and the numbers say "great operator, decelerating cycle, still-full price," which is a Watch, not a Buy.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 6 · Elevated | No meaningful funded debt (net debt is almost entirely operating-lease obligations), beta ~0.98, but 32× trailing into flat comps and margin compression, and a −48% max drawdown shows how violently a growth de-rate hits this name. |
| Growth Quality | 5 · Moderate | ~10% fwd revenue / ~14% fwd EPS CAGR and elite returns (ROIC ~18%, ROE ~48%), but comps have flattened to +0.5% and restaurant-level margin is compressing — quality is real, momentum is not. |
| Exponential Potential | 3 · Low-Moderate | Unit growth (350–370 stores/yr) is genuine and there's a long US + international runway, but growth is decelerating, and a $45B single-format US chain does not multibag from here. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is by definition the expected path, so a weighted blend would just restate it with false precision. Instead the cases bound the range, and the scores above summarize them.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | Comps re-accelerate to mid-single digits on menu innovation + throughput; restaurant margins re-expand; international proves out. FY27E EPS beats to ~$1.45 (vs $1.36 cons); market re-rates back to ~36×. | ~$52 (+47%) |
| Base (our anchor) | Estimates roughly hit — FY27E EPS $1.36; a high-quality but decelerating compounder earns a ~28× forward multiple. | ~$38 (+7%) |
| Bear | Comps stay flat/negative, beef & labor inflation persists, restaurant margin keeps sliding; the growth premium unwinds. FY27E EPS misses to ~$1.20; multiple de-rates to ~22×. | ~$26 (−26%) |
Synthos fair value = the base case, ~$38 (+7%), with the full $26–$52 span as the honest range. Our base sits below the Street's $42.94 consensus — we give less benefit of the doubt to a comps re-acceleration that hasn't shown up yet — and our bear ($26) is meaningfully below the Street's $36 low, because we take the margin-compression cycle seriously. This is a tracked call — the Forecaster Scorecard grades it once it matures.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating, multi-baggers-from-here). CMG is a high-quality compounder that is currently decelerating — the opposite of the forward-accelerating profile we hunt for:
- Forward growth: revenue CAGR FY25→FY30E ~10.4% ($11.9B → $19.5B est); EPS CAGR ~13.9% ($1.15 → $2.21 est) as unit count and modest margin recovery compound. Solid, not explosive.
- Acceleration (the 2nd derivative) is negative: revenue growth was +14.3% (FY24) → +5.4% (FY25), and Q1'26 comps were just +0.5% with EPS down 18% YoY. The engine has clearly downshifted from the 2023–24 boom. This is a decelerating name today.
- Room to run: unit growth is the real story — 350–370 new restaurants/yr toward a stated long-term US target commonly cited around ~7,000 (from ~4,100 today), plus early international optionality. That is a multi-year runway, but at $45B market cap for a single-format, ~98%-US chain, a 5× from here implies a ~$225B restaurant company — larger than any restaurant operator today. The math caps the multibagger.
- Reinvestment runway: genuinely strong — high-return new-unit economics (Chipotlanes lift returns) funded entirely by internal FCF (~$1.45B FY25), no dilution.
Exponential Potential: Low-Moderate (3/10). Own CMG, if at all, for steady double-digit earnings compounding from unit growth once the comp cycle turns — not for a fast multibagger, and not while comps are flat. A small, accelerating chain would score far higher; a mature, decelerating $45B one scores low.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 $11.93B, +5.4% (FY24 $11.31B, +14.6% on FY23 $9.87B). The deceleration from mid-teens to mid-single-digit growth is the single most important fact in this note.
- Quarterly trajectory (the downshift): Q1'25 $2.88B → Q2 $3.06B → Q3 $3.00B → Q4 $2.98B → Q1'26 $3.09B (+7.4% YoY, but on just +0.5% comps — growth is now openings-led, not traffic-led).
- Margins: gross 36.1% TTM; operating margin 12.9% in Q1'26, down from 16.7% a year earlier; net ~12.0% TTM. Restaurant-level margin fell to 23.7% (from 26.2%) on beef/freight/labor inflation — this is compressing, not expanding.
- Earnings: FY25 net income $1.54B, essentially flat vs FY24's $1.53B; EPS $1.15 vs $1.12. Q1'26 net income $302.8M, down from $386.6M — EPS $0.23 vs $0.28.
- Cash flow: operating CF $2.11B, capex −$666M (new units), FCF ~$1.45B FY25 — strong and self-funding; the entire $2.43B buyback was funded from cash.
- Balance sheet: cash & investments ~$1.05B; no traditional funded debt — the ~$9.8B "total debt" and $9.5B "net debt" on the balance sheet are almost entirely operating-lease obligations (CMG leases its restaurants). Net-debt/EBITDA screens at 2.19×, but that is lease-inflated; on real borrowings the balance sheet is clean.
6. Valuation — priced in or room?
Even after a −39% year, CMG is not cheap on trailing numbers: 32× EPS, 4.2× sales, 22× EV/EBITDA. The bull's defense is that EPS out-grows the multiple: on live consensus the forward P/E is 31× (FY26E) → 26× (FY27E) → 16× (FY30E) — so the multiple compresses at a flat price if estimates hit. But note that FY26E EPS ($1.14) is essentially flat vs FY25 ($1.15) — the market is being asked to pay 31× for a year of ~zero EPS growth, betting on the 2027+ re-acceleration. That is the crux: you are paying a growth multiple during a growth pause.
A reverse read: today's ~$35 implies the market still expects the low-teens EPS CAGR to reassert. If comps stay flat, that premium is vulnerable. Street targets (context): consensus $42.94, high $52, low $36 (47 Buy / 20 Hold / 0 Sell) — the sell side remains constructive, but our base ($38) is below consensus because we won't underwrite a comp recovery we can't yet see. Not a value buy; a quality-at-a-still-full-price name in a soft patch.
7. Technicals (from the tech block)
- Trend: weak / basing. $35.39 sits above the 50-DMA ($32.27) but essentially at the 200-DMA ($35.51) — the 50 is below the 200 (no golden cross; recovering off a downtrend). MACD +0.68 (mildly positive, short-term bounce).
- Location: −38% off the 52-week high ($57.07), +25.6% off the 52-week low ($28.18), and a brutal −48% max drawdown from peak — this has been a falling knife that is now trying to base.
- Momentum: RSI(14) ~70 — right at the overbought line after the recent bounce, so this is not a low-risk technical entry point even if you like the story.
- Relative strength (the tell): CMG −39% 12-mo vs SPY +21% and QQQ +30% — massive underperformance over the year; only in the last 3 months (+8.5%) has it begun to stabilize, still lagging SPY (+14%) and QQQ (+22%).
- Read: technicals confirm the caution — a deeply out-of-favor name attempting to base, but bumping RSI 70 into the 200-DMA. No urgency to buy; let it prove the base and let comps inflect first.
8. Moat & competitive position
Chipotle's moat is real but narrower than a consumer-staples franchise: (1) a brand + throughput advantage — "food with integrity" positioning, industry-leading unit volumes (~$3.2M AUV) and best-in-class digital penetration (38.6% of sales); (2) a company-owned model that captures full restaurant margin and enforces consistency; and (3) new-unit economics (Chipotlanes) that generate high cash-on-cash returns and fund growth internally. The vulnerabilities: it sells a single, discretionary product exposed to food/labor inflation and to consumer trade-down in a soft economy, and it has no franchising cushion — every same-store slowdown hits earnings directly.
Peer set (market cap, FMP-supplied — note these are broad Consumer-Cyclical comps, not pure burrito peers): Yum! Brands $45.4B (the closest QSR comp), Restaurant Brands Intl $25.9B, plus non-restaurant cyclicals the screen lumped in — Carnival $38B, D.R. Horton $45B, eBay $51B, Las Vegas Sands $31B, JD.com $36B, Copart $28B, Flutter $18B, Trip.com $26B. Against QSR peers CMG still commands a premium multiple (32× vs YUM/QSR in the high-teens/low-20s) — justified only if growth re-accelerates.
9. Management, capital allocation & guidance
- Capital allocation: disciplined and shareholder-friendly — CMG bought back $2.43B of stock in FY25 and $700.8M more in Q1'26 (avg $36.14/share), with $1.0B remaining on authorization, all funded from FCF with no dividend and no funded debt. Buying back stock during the drawdown is defensible if the base case holds; it is value-destructive if the bear case plays out.
- Insider activity: the only recent Form 4s in the data are routine director equity awards (2026-06-11, 6,880 shares each at $31.25) — grants, not open-market buys or sells. No signal either way.
- Management's own guidance (half-weighted — their own book). From the SEC 8-K / Q1'26 earnings release (filed 2026-04-29), management's FY2026 outlook: full-year comparable restaurant sales "about flat"; 350–370 new restaurant openings (including 10–15 international partner-operated); ~80% of company-owned units to have a Chipotlane; underlying full-year tax rate 24–26%. Read honestly: management is itself guiding to flat comps for 2026 — this is not a company promising a snap-back, which reinforces the Watch stance. Guidance is management's self-interested framing and is half-weighted by design.
10. Catalysts & what to watch
- Next earnings: 2026-07-29 (Q2'26; Street EPS $0.32, revenue ~$3.33B). The key line: comparable restaurant sales and transactions — does traffic inflect above flat?
- Restaurant-level margin: whether beef/freight/labor inflation eases and margin stops compressing (23.7% Q1'26 vs 26.2%).
- Unit development: hitting the 350–370 openings pace and Chipotlane mix — the openings-led growth engine.
- International: early partner-operated (franchised) traction — the only genuine new TAM leg.
- Consumer/macro: trade-down risk in a soft consumer; CMG's discretionary check is exposed.
Thesis tripwires (what would change the call): two consecutive quarters of negative comps (would push toward Avoid); restaurant margin falling below ~22%; or — on the bull side — comps re-accelerating to mid-single-digits with margin stabilizing (would push toward Buy — Tactical).
11. Key risks
- Comp deceleration (the live risk): comps are already flat and management guides flat for 2026; a slide to negative would unwind the premium multiple.
- Margin compression (structural-cyclical): beef, freight and labor inflation cut restaurant-level margin to 23.7%; company-owned model gives no franchising buffer.
- Valuation / de-rating: 32× trailing with ~zero FY26E EPS growth leaves little margin for error — the −48% drawdown shows how fast this de-rates.
- Single-product, US-concentrated: ~98% US, one format, discretionary spend — no diversification cushion and full exposure to a US consumer slowdown.
- Buyback timing: aggressive repurchases during a decelerating cycle destroy value if the bear case is right.
- No expert coverage: unlike our conviction names, there is no independent expert panel corroborating (or contesting) the setup — lower information breadth.
12. Verdict, position sizing & monitoring
Watch. Chipotle is a genuinely elite operator — best-in-class unit economics, a clean balance sheet (ex-leases), ~$1.45B of self-funding FCF, and a real multi-year unit-growth runway. But three things keep it out of the Buy column today: (1) growth has decelerated to +0.5% comps with EPS declining YoY and management itself guiding flat comps for 2026; (2) margins are compressing, not expanding; and (3) the stock still trades at ~32× trailing / 31× FY26E for ~zero near-term EPS growth. After a −48% drawdown it is closer to fair — our $38 base is +7% — but that is not enough margin of safety to underwrite as a core buy, and there is no expert conviction in the KB to lean on.
- Sizing: if owned at all, satellite-only, 0–2% as a starter to build a position into a proven comp inflection or a cheaper price — not a core holding at this multiple/cycle.
- Monitoring: re-underwrite on the §10 tripwires; formal re-score each earnings print. A comp re-acceleration + margin stabilization moves this to Buy — Tactical; two negative-comp quarters moves it toward Avoid. This verdict is logged as a tracked Synthos call as of 2026-07-03 at $35.38.
- Single biggest risk: comps stay flat/negative while restaurant margins keep compressing — the growth premium unwinds and the multiple de-rates further.
Provenance & disclosures
- Traceability: 0 KB claims for CMG — no expert coverage; this verdict is explicitly fundamentals- and quant-driven. No
claim_idis cited because none exists; fabricating conviction is structurally impossible (claim-ID reconciliation) and none was fabricated here. - Data as-of: fundamentals 2026-03-31 (Q1'26) · estimates & prices 2026-07-02/03 · management guidance from SEC 8-K filed 2026-04-29. Forward figures are analyst consensus (FMP), labeled as estimates.
- Split note: per-share figures reflect CMG's 2024 50-for-1 stock split; a ~$35 price and ~$1.15 EPS are post-split.
- Management caveat: management's FY26 guidance (flat comps, 350–370 openings) is management's own book, half-weighted by design.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").