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Chipotle Mexican Grill, Inc. Message Board

  • future_is_fiber future_is_fiber Feb 6, 2013 2:44 PM Flag

    CMG Up on Hope?

    Please explain: CMG barely met earnings estimates and guided a growth of mid-single digits. Most alarmingly margins are DROPPING!! Analysts are "hoping" CMG can successfully increase prices to off-set the margin increase. So how is this POS up trading at PE of 40?? What am I missing?
    When BIDU is trading at PE of under 20 with a growth rate of 40%!!! There's a major disconnect here. Irrational exuberance is now in the market. Brace for a crash soon.

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    • crazy for sure, management is afraid to raise prices until 2H 2013 to prevent SSS tail-off, they think they have costs under control, but like you said, margins are declining, SSS are declining no matter what , they are basically hanging their hats on new openings to drive EPS, which have been good. BUT the higher performing openings have been in established proven markets and as they move away from , and run out of those opportunities the earings growth will slow even more. 10% earnings growth, a PE close to 40, with the possibility of even slower growth. This stock is a trade with the flip of a coin.
      bias has to be down this year.... a new veggie product and catering is not going to increase earnings enough to offset the trail off in SSS, and the margin compression until the price increases in 2H.

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