First of all, Chipotle (GCM) – Get the report from Chipotle Mexican Grill, Inc. may be one of the biggest surprises in the market for many investors. Of course, we all expect the FAANGs to command huge stock valuations. But how many people knew that the quick, casual Mexican restaurant was priced at the time of writing over $ 1,750 per share?
Now, the Action Alerts Plus team sees even better things in the future for Chipotle Mexican Grill. They recently wrote:
New report from Black Box Intelligence shows restaurant sales increased 8.3% year-on-year in November compared to November 2019 [pre-pandemic]. The company noted better-than-expected performance for fast-casual dining, the category that houses the Chipotle Mexican Grill, and larger vouchers. Black Box also reported that restaurant sales for the first week of December “posted stronger sales growth than the monthly sales growth reported for August, September and October.”
The team added that âWe remain quite comfortable with our price target of $ 2,000, given that CMG shares are currently trading at a price / earnings / growth ratio close to 1.5 to 3, 7 for Domino’s shares. (DPZ) – Get the report from Domino’s Pizza, Inc., while Yum Brands (YUM) – Get Yum! Report from Brands, Inc. and Papa John’s (PZZA) – Get the report from Papa John’s International, Inc. are 2.0 and 2.36 respectively. There you go, Chipotle is expected to grow profits at a compound annual growth rate of 33% over the 2019-2022 period, compared to 17% for Domino’s and just under 12% for Yum Brands. “
The team concluded, âAs confidence in Chipotle’s ability to achieve and deliver this expected earnings per share, we should see its PEG ratio rise more than the 1.8 which is derived from our current price target. And because some will likely ask, all the status quo, a PEG ratio of 2.0 implies a CMP share price closer to $ 2,200.