Last Update 20 Nov 25
Fair value Decreased 4.23%CMG: Robust Unit Expansion Plans Will Lead to Improved Performance
Analysts have lowered their average price target for Chipotle Mexican Grill, cutting it from approximately $45.09 to $43.18 per share. Ongoing macroeconomic pressures and softer same-store sales trends continue to weigh on the company's near-term outlook.
Analyst Commentary
Recent Street research reflects both cautious and constructive perspectives on Chipotle Mexican Grill, with analysts responding to ongoing industry and macroeconomic challenges as well as the company’s recent performance trends. Multiple firms have lowered their price targets, citing headwinds and near-term uncertainty, but some maintain longer-term confidence in Chipotle's fundamentals and strategic initiatives.
Bullish Takeaways
- Bullish analysts maintain that Chipotle's brand strength and robust unit expansion plans for 2026 support a positive long-term outlook, despite current soft patches.
- Recent upgrades cite increased advertising and targeted marketing efforts, alongside strategic use of limited time offers and higher menu pricing, as drivers of sales improvement in the latest quarter.
- Several believe that management's conservative guidance sets a low bar for same-store sales, potentially positioning the company to exceed expectations if traffic and promotional initiatives gain traction.
- Positive transaction growth trends and Chipotle's continued investment in menu innovation and improved operations are viewed as supportive of eventual comp recovery and valuation upside.
Bearish Takeaways
- Bearish analysts caution that macroeconomic pressures, compounded by softening traffic and a shift among consumers from fast casual dining to eating at home, continue to weigh on near-term performance.
- Guidance for same-store sales growth has been revised downward for several consecutive quarters, raising concerns about execution risk and uncertainty around when growth will reaccelerate.
- Some remain cautious given the ongoing weakness in demand trends, particularly among lower-income and younger demographics, and the firm's inability thus far to fully offset traffic declines with menu or marketing actions.
- A lack of visibility on 2026 guidance and the expectation of negative comps into the fourth quarter keep shares in a "penalty box," with limited valuation support over the next several quarters.
What's in the News
- President Trump is set to cut tariffs on beef, tomatoes, coffee, and bananas. This move could impact grocery prices and several restaurants, including Chipotle Mexican Grill (Bloomberg).
- Chipotle's management anticipates 350 to 370 new restaurant openings in 2026, including 10 to 15 international partner-operated locations. Over 80% of company-owned stores are expected to feature a Chipotlane.
- The company has provided sales guidance for 2025, forecasting full year comparable restaurant sales to decline in the low-single digit range.
- Chipotle recently announced the return of its popular Boorito Halloween promotion, the "Chip-or-Treat" incentive program for Rewards members, and a Build-Your-Own Chipotle family meal option, available as a digital exclusive.
- Significant share repurchases were completed in multiple tranches, totaling over $400 million since July 2025.
Valuation Changes
- Consensus Analyst Price Target has moved lower, dropping from $45.09 to $43.18 per share.
- Discount Rate edged down slightly, shifting from 8.54% to 8.53%.
- Revenue Growth projections increased slightly, from 10.97% to 10.98%.
- Net Profit Margin outlook decreased, going from 13.33% to 12.80%.
- Future P/E has risen marginally, from 32.77x to 32.85x.
Key Takeaways
- International expansion plans into Mexico, Latin America, and Europe are expected to drive future revenue growth.
- Investments in technology and new menu offerings aim to improve efficiency, margins, and transaction growth.
- Economic uncertainties, tariffs, and increased competition pose risks to Chipotle's revenue growth, net margins, and market share in the fast-casual dining space.
Catalysts
About Chipotle Mexican Grill- Owns and operates Chipotle Mexican Grill restaurants.
- Chipotle is expanding its international presence with plans to open restaurants in Mexico by 2026 and exploring further expansion in Latin America and Europe. This international expansion is expected to drive future revenue growth.
- The company is investing in technological innovations such as produce slicers and a new equipment package to improve operational efficiency and consistency, which can positively impact net margins by reducing labor costs and enhancing throughput.
- Chipotle aims to expand its catering business, currently 1.5% of sales, with a new test involving equipment and technology improvements. This could boost future revenue as catering becomes a larger portion of sales.
- Chipotle plans to increase marketing spend over the summer, focusing on digital and social channels, which could enhance brand visibility and drive revenue growth through increased customer acquisition and retention.
- The introduction of new menu offerings like Chipotle Honey Chicken and other limited-time offers is expected to drive incremental transactions and support positive transaction growth in the second half of the year, impacting future revenue and potentially earnings.
Chipotle Mexican Grill Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Chipotle Mexican Grill's revenue will grow by 12.3% annually over the next 3 years.
- Analysts assume that profit margins will increase from 13.3% today to 14.2% in 3 years time.
- Analysts expect earnings to reach $2.3 billion (and earnings per share of $1.83) by about September 2028, up from $1.5 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $2.0 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 40.6x on those 2028 earnings, up from 34.3x today. This future PE is greater than the current PE for the US Hospitality industry at 23.9x.
- Analysts expect the number of shares outstanding to decline by 1.59% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.61%, as per the Simply Wall St company report.
Chipotle Mexican Grill Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The slowdown in consumer spending due to economic uncertainty has led to a decline in transaction trends, which could impact revenue growth.
- The introduction of tariffs on key ingredients and packaging materials poses a risk to cost of sales, potentially affecting net margins.
- The heightened competition in the fast-casual dining space may challenge Chipotle’s ability to maintain market share and revenue growth.
- The potential impact of increased capital expenditures due to new tariffs on materials for new restaurant builds could reduce the return on new store investments and compress profit margins.
- The ongoing consumer pullback across different income cohorts and geographies suggests macroeconomic pressures may continue, threatening revenue and earnings if not addressed effectively.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $57.75 for Chipotle Mexican Grill based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $65.0, and the most bearish reporting a price target of just $46.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $16.4 billion, earnings will come to $2.3 billion, and it would be trading on a PE ratio of 40.6x, assuming you use a discount rate of 8.6%.
- Given the current share price of $39.46, the analyst price target of $57.75 is 31.7% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.