Is Chipotle Mexican Grill a Bargain After Shares Slide Nearly 50% in 2025?

• Wondering if Chipotle Mexican Grill is worth a spot on your watchlist? You’re not alone. Many investors want to know if this popular fast-casual stock is undervalued, overhyped, or finally at an attractive entry point.
• After some sharp moves lately, Chipotle shares rose 2.2% this week. However, they are still down nearly 25% in the last month and almost 48% since the start of the year.
• Recent headlines highlight evolving consumer trends and strong competition in the restaurant industry. Some analysts have adjusted price targets as sentiment changes. The conversation about food inflation and digital ordering continues to shape investor expectations.
• On our valuation checkup, Chipotle scores a 3 out of 6, meaning the company is undervalued in half of the criteria we track. Next, we will break down what that means using a few common valuation approaches. Keep reading for a deeper way to look beneath the surface that might really change how you see the stock.

Find out why Chipotle Mexican Grill's -49.7% return over the last year is lagging behind its peers.

Approach 1: Chipotle Mexican Grill Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting them back to today’s dollars. This method helps investors understand what the business is worth based on expected free cash flow generation, independent of market hype or near-term volatility.

For Chipotle Mexican Grill, the DCF model utilizes a 2 Stage Free Cash Flow to Equity approach. The company generated free cash flow of approximately $1.57 billion last year. Analysts provide estimates for the next five years, projecting steady growth. By 2029, free cash flow is forecast to reach nearly $2.48 billion, with longer-term projections continuing to rise, although these are extrapolated beyond the analyst consensus.

Based on these projections, the DCF model calculates an intrinsic value that is about 12.6% higher than Chipotle’s current share price. In simple terms, this suggests the market is undervaluing Chipotle’s long-term ability to generate cash.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Chipotle Mexican Grill is undervalued by 12.6%. Track this in your watchlist or portfolio, or discover 924 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Chipotle Mexican Grill.

Approach 2: Chipotle Mexican Grill Price vs Earnings

The price-to-earnings (PE) ratio is a popular metric for evaluating profitable companies like Chipotle Mexican Grill, as it measures how much investors are willing to pay for each dollar of earnings. Companies with strong growth prospects or lower perceived risks generally command higher PE ratios. Those with slower growth or higher risk typically have lower “fair” multiples.

Currently, Chipotle trades at a PE ratio of 26.8x. For context, the average PE ratio across the broader hospitality industry is 20.8x, suggesting Chipotle commands a premium. Looking at similar peers, the average is even higher at 41.5x, showing some stocks in the sector are priced with greater expectations for growth or profitability.

Simply Wall St’s “Fair Ratio” for Chipotle is 26.1x. Unlike broad industry or peer averages, this proprietary multiple considers company-specific factors such as earnings growth, risk, profit margins, industry dynamics, and market cap. This tailored approach provides a more accurate benchmark for assessing whether the stock is sensibly valued given its unique profile.

When comparing Chipotle’s actual PE of 26.8x to the fair ratio of 26.1x, they are closely aligned. This suggests that while the shares may not be a steep bargain, the current valuation is roughly in line with what investors should expect given the company’s fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1441 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Chipotle Mexican Grill Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives, a tool that allows you to craft your own story about a company’s future and connect it directly to its financial outlook and fair value.

A Narrative is your personal, evidence-based perspective on a company’s business: you combine your assumptions about revenue, margins, and market trends with your expectations for fair value. This approach goes beyond basic ratios or models, empowering you to link the company’s unique context and news to a forward-looking financial forecast, bringing the "why" behind the numbers to the forefront.

On Simply Wall St’s Community page, you’ll find millions of investors using Narratives as a simple, accessible tool for making buy or sell decisions. Narratives clearly display how your anticipated fair value compares to the current price, updating instantly as new news, earnings, or data arrive. For example, bullish investors on Chipotle Mexican Grill may see robust unit expansion and margin growth driving fair value up to $65 per share, while more cautious investors, worried about competition and economic headwinds, may only see $46. This shows how different stories can lead to very different views on price.

Do you think there's more to the story for Chipotle Mexican Grill? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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