CHIPOTLE MEXICAN GRILL INC (NYSE:CMG) – A Quality Stock with Strong Fundamentals

CHIPOTLE MEXICAN GRILL INC (NYSE:CMG) stands out as a strong candidate for quality investors, meeting key criteria for revenue growth, profitability, and financial health. The company’s consistent performance and efficient capital allocation make it a compelling choice for long-term investors.

Why CMG Fits the Quality Investing Criteria

• Revenue Growth: CMG has delivered a 5-year revenue CAGR of 12.64%, well above the 5% minimum threshold for quality stocks. This reflects strong demand and effective execution.
• EBIT Growth: The company’s 5-year EBIT CAGR of 32.30% significantly outpaces revenue growth, indicating improving operational efficiency and pricing power.
• High ROIC: With a 23.14% Return on Invested Capital (excluding cash and goodwill), CMG demonstrates an ability to generate strong returns from its investments.
• Strong Profit Quality: A 5-year average Profit Quality of 100.43% shows that nearly all net income is converted into free cash flow, a sign of reliable earnings.
• Zero Debt: CMG carries no debt, making its Debt/FCF ratio 0, which highlights financial stability and flexibility.

Fundamental Analysis Summary

Our fundamental report assigns CMG a rating of 6 out of 10, with standout scores in profitability (8/10) and financial health (8/10). Key strengths include:

• Profitability: High ROIC (18.96%), strong margins (13.59% net margin), and consistent earnings growth.
• Financial Health: No debt, solid liquidity (Current Ratio of 1.52), and a high Altman-Z score (10.42) signaling low bankruptcy risk.
• Valuation: While CMG trades at a premium (P/E of 48.64), its growth prospects (14.78% expected EPS growth) may justify the higher multiple.

For investors seeking high-quality businesses, CMG’s combination of growth, profitability, and financial strength makes it worth further consideration.

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Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.