What Does Chipotle Mexican Grill, Inc.'s (NYSE:CMG) Share Price Indicate?

Let's talk about the popular Chipotle Mexican Grill, Inc. (NYSE:CMG). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Chipotle Mexican Grill’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Chipotle Mexican Grill

What Is Chipotle Mexican Grill Worth?

Chipotle Mexican Grill appears to be overvalued by 35% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$1,591 on the market compared to my intrinsic value of $1179.77. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Chipotle Mexican Grill’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Chipotle Mexican Grill look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 95% over the next couple of years, the future seems bright for Chipotle Mexican Grill. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? CMG’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe CMG should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on CMG for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for CMG, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for Chipotle Mexican Grill and you'll want to know about this.

If you are no longer interested in Chipotle Mexican Grill, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

What are the risks and opportunities for Chipotle Mexican Grill?

NYSE:CMG

Chipotle Mexican Grill

Chipotle Mexican Grill, Inc., together with its subsidiaries, owns and operates Chipotle Mexican Grill restaurants.Show more

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Rewards

• Earnings are forecast to grow 17.71% per year

• Earnings grew by 37.7% over the past year

Risks

• Significant insider selling over the past 3 months

View all Risks and Rewards

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Chipotle Mexican Grill

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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.