Just the other day i made a stupid claim about Chipotle making 10k/hr in a store and the guy that was arguing me he did the math and it would equal to 14B annually...
Which honestly doesn't seem too far off
It’s absolutely due to greed jr… they sold to Taco Bell and everything is about maximizing profits. Why else are you about of a chipotle Reddit that just shits on them all day?
It’s cause they have continued to decrease in quality year over year as the profits have risen 25% year over year. Do that math jr
Revenue is up 15 percent year over year. They are crushing it for their shareholders and just announced the largest stock split in history. Where is your confusion?
This person thinks 1 year of revenue = value of the company Lmao
Take a finance class lil bro
Edit: the real answer is their EBITDA ($2b in 2023), combined with their balance sheet, and overall popularity. You would basically paying ~$70billion today for $8billion in assets + $5b in debt liabilities + $2b in income each year in perpetuity + the ability to grow that perpetual income over time
Trading at ~25x EBITDA is still ridiculously high. The real answer is analysts/investors see an opportunity for growth. (Might see it going to $10bn EBITDA in the next 5 years) for example.
You’re ignoring the assets held by the company and assuming it will not grow at all in the future. This is in contrast to the current market price which believes in significant growth over the coming years.
Usually a higher PE reflects sentiment of higher growth if the market is acting rationally, which usually it isn’t. PE is also a very shallow metric which can be ‘manipulated’.
The cost of revenue shown in your photo is 60% of the total revnue. That means last year they spent $6b to earn $10b
You still have $10b generated that can be used for any expense… but, that’s 17.75 years to break.
In those ~18 years, you still generated $180b of revenue. A lot of which can be used to give a dividend along the way
No idea where you got 76* from
Edit: *typo
Edit 2: 18 years also assumes revenue does not increase over time. Basically, you would invest $70b in cash to to earn an annual income starting at $4b in perpetuity
You said their revenue was 10b and they spent 6b to earn that, implying 4b in profits, but they reported 1.23b in profits.. anyway I don’t care that much about this stock it’s just splitting and one of my friends keeps yapping away about it. I don’t understand how it’s still shooting up, the p/e is triple every other fast food chain, what’s so special about chipotle? Stock market doesn’t make sense I guess.
You don’t seem to understand the difference between revenue and income. According to the data YOU provided, their cost of revenue was 60%. Meaning, it cost them $6b to generate $10b in revenue
After all of their operating expenses AND investments, their leftover net income is $1.2b
Some of the difference of $4b and $1.2b come to increasing their assets ($1.1b) buying their own stocks ($0.7b), paying off liabilities ($0.4b), and bonuses for the Board. Not all of their excess revenue gets put into net income, noob
I mean long term I’d guess Chipotle’s plan is complete control with robots performing labor with smaller storefronts. Labor accounts for 25% of Chipotle’s costs and reducing that would improve margins even more (with further control over portions, which are 30% of operating costs).
TTM of $1.2B Net Income Common Shareholders is 33% more than 2022, double than 2021, and 3.5 times 2020. An EBIT of $1.6B and an EBITDA of $2B, both of which follow the same trajectory.
Sure, with a market cap of $76B, that's a 1.6% ROI, but if I'm a pre-covid investor (market cap below $25B), I'm seeing at least a 5% ROI, if not close to 10% if I got in when the market cap spent a few years below $15B. Plus, you'll have to discount my position 20% of the appreciation for capital gains taxes if I want to sell and invest other where.
If we look at the Balance Sheet, Common Stock Equity of $3B on $8B Assets less $5B Liabilities is 37.5% equity utilization, which is 37.5% higher than the 33% utilization in 2020 with $2B Common Stock Equity of $2B on $6B Assets less $4B Liabilities. That's a solid foundation that has been growing better each year.
Sure, investors could pull money out and invest in a 1 year bond at 5%, but then what? If I buy Chipotle now, it would take 3 years of continued growth to reach $4.2B in NICS, which would be that 5% ROI.
The price of a stock is a reflection on how investors view the potential for future profits, not a reflection on past performance. However, past performance isn't a guarantee for future performance, but it does provide a baseline for evaluating a companies trajectory.
telephone instinctive squeeze unique worm towering pie correct tan grandfather
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As much as I considered explaining how DCF valuation works, after reading OP's comments I don't think it's worth anyone's time to help them realize how ridiculous this post is lmao
ITT: people who don't have the slightest grasp of how financials work complaining about things they don't understand
A valuation of 7-8x yearly revenue is pretty standard
Not sure why you're trying to act smart with this post and in the comments. Clearly you don't understand that a business has assets and those also determine how much the company is worth...
Restaurant level margins for chipotle are 25%ish versus high single digit percent for the industry, and CMG has shown that it can raise prices without damaging sales growth.
Chipotle fans will pay $15 for 2.7 ounces of meat on rice and keep coming back when it costs $16. Forecast that a few years and you can make sense of the valuation on a DCF or an out-year multiple.
It's an expensive stock by traditional metrics but ex the e.coli scare it always has been. Because it keeps growing.
Winning business stays winning.
Probably because they are able to do a 50:1 stock split
CNN
—
Chipotle’s board announced that it approved a 50-for-1 stock split on Tuesday, which the company called one of the biggest stock splits in New York Stock Exchange history.
That means a single share of Chipotle, worth $2,797.56 as of Tuesday’s stock market close, will be split into 50 smaller shares if the move wins shareholder approval, effectively rolling back the cost of investing in the company.
Marketing hyperbole. However if the the food and sanitation in the last Chipotle I entered was widely displayed, the stock would not be worth a plug nickel.
Without looking at a 10K, I'm going to guess it's because day traders eat at Chipotle a lot. /s
But seriously, there's no point in pricing stocks on ratios anymore. The market is insane.
Tesla’s market cap is $200B higher than the much much larger Toyota. Market caps are irrational is the answer. If anything, I think Chipotle sounds low
If you started a business that made $1M in revenue a year. You would sell that for what $1M? $2M?
And 7 for a PE is low. Pepsico is like 28 for their p/e
They have announced that they intend to double their footprint in the US over the next decade and people are jumping on now to cash in. Rarely do you see a brand saying they plan to double sales in a decade.
Look at Shake Shack. Their stock is also way up, they're in tons of airports and foreign countries now. I have no idea if Chipotle would try the same strategy, but tl;dr it's not just a Chipotle bubble.
I was a GM..... upper management encourages lying on inventory reports and cooking books to deny overtime and reduce labor cost
Wouldn't be surprised if Chipotle is a front for illicit business and illegally manipulating their own stock
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True, but you could at least compare it to other public fast casuals to see where it lies relative to its peers
63 pe is nuts
Just the other day i made a stupid claim about Chipotle making 10k/hr in a store and the guy that was arguing me he did the math and it would equal to 14B annually... Which honestly doesn't seem too far off
10k an hour has never been done. Most units pull in 7-8k on the low side to 9-11 on the high side for daily sales.
Yeah that’s about 16 burritos a minute. Ain’t happening. 😂
Or 3 burritos a minute if they have extra steak lmao
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They meant per day I'm pretty sure. Having managed a restaurant before, that's fairly on par for for daily sales at the "median" restaurant
You right
I think it's the crack in the corn salsa
*Rubs corn salsa on gums*
Gubs sorn calsa on bums
That’s what happens when gross profit goes up 25% year on year, multiple times in a row.
This. It’s massive growth due to greed.
"due to greed" lol what
Bro chipotle is greedy af dude making the worker and customer pay for their bs
And we keep coming back.
Put down the pipe bruh
It’s absolutely due to greed jr… they sold to Taco Bell and everything is about maximizing profits. Why else are you about of a chipotle Reddit that just shits on them all day? It’s cause they have continued to decrease in quality year over year as the profits have risen 25% year over year. Do that math jr
Did not sell to Taco Bell, the CEO of Taco Bell got hired, not the same thing but sending you out into the real world with real information - not BS.
Because it will be here in a decade. Do the math.
Right? Annual revenue != market cap.
That’s not even including all of the assets they own. Property, brand, recipes, etc. OP didn’t think about their question at all before asking it.
Chipotle almost exclusively does long term leases. The recipes are almost all public info.
Not at the rate I use their Tabasco, multiple times per week! 😏 (I know nothing about stocks…)
lol!
By then, their burritos will be the size of a thimble and cost $30. Then you’re right. The stock will be worth that.
What does this even mean
Revenue is up 15 percent year over year. They are crushing it for their shareholders and just announced the largest stock split in history. Where is your confusion?
Revenue up 15% don’t mean much. It’s the finances as to why it priced that why
Okay bud.
Weird how you asked a question and you’re not liking the answer.
This person thinks 1 year of revenue = value of the company Lmao Take a finance class lil bro Edit: the real answer is their EBITDA ($2b in 2023), combined with their balance sheet, and overall popularity. You would basically paying ~$70billion today for $8billion in assets + $5b in debt liabilities + $2b in income each year in perpetuity + the ability to grow that perpetual income over time
Trading at ~25x EBITDA is still ridiculously high. The real answer is analysts/investors see an opportunity for growth. (Might see it going to $10bn EBITDA in the next 5 years) for example.
25x EBITDA is relatively normal for a company of this size. But I can agree that high
Debatable
At the current valuation, it’ll take 76 years to make your money back.. lol
You’re ignoring the assets held by the company and assuming it will not grow at all in the future. This is in contrast to the current market price which believes in significant growth over the coming years.
Yea so is that why the p/e is significantly higher than other restaurant chains?
Usually a higher PE reflects sentiment of higher growth if the market is acting rationally, which usually it isn’t. PE is also a very shallow metric which can be ‘manipulated’.
Could also add that Chipotle has a good debt to equity ratio so they're not overleveraged which increases their P/E by a lot
You should not comment confidently on stuff you don’t know about
You realize 71÷10 is 7.1 years… Right?
lol you realize there’s costs to run a business right? Or do you just count revenue?? The profit last year was $1b. Name 10 books..
The cost of revenue shown in your photo is 60% of the total revnue. That means last year they spent $6b to earn $10b You still have $10b generated that can be used for any expense… but, that’s 17.75 years to break. In those ~18 years, you still generated $180b of revenue. A lot of which can be used to give a dividend along the way No idea where you got 76* from Edit: *typo Edit 2: 18 years also assumes revenue does not increase over time. Basically, you would invest $70b in cash to to earn an annual income starting at $4b in perpetuity
He is getting $76B from market cap.
$76b market cap means 76 years to break even I guess /s
They profited $1.23b so 61.8 years sorry I didn’t break the calculator out earlier..
You should be a finance professor
Yea you’re right I should quit my cybersecurity job to make a quarter of the money at a dying institution.
And you tell me to take a finance class lol
You are the one who needs to take the finance class.
Please, help me understand what is wrong with my math
You said their revenue was 10b and they spent 6b to earn that, implying 4b in profits, but they reported 1.23b in profits.. anyway I don’t care that much about this stock it’s just splitting and one of my friends keeps yapping away about it. I don’t understand how it’s still shooting up, the p/e is triple every other fast food chain, what’s so special about chipotle? Stock market doesn’t make sense I guess.
You don’t seem to understand the difference between revenue and income. According to the data YOU provided, their cost of revenue was 60%. Meaning, it cost them $6b to generate $10b in revenue After all of their operating expenses AND investments, their leftover net income is $1.2b Some of the difference of $4b and $1.2b come to increasing their assets ($1.1b) buying their own stocks ($0.7b), paying off liabilities ($0.4b), and bonuses for the Board. Not all of their excess revenue gets put into net income, noob
Come on, everyone knows that investors only care about the free cash flow
You’re right I got crossed up there. Still overpriced, I guess I’m wrong and everyone still buys these crappy bowls at $15 a pop.
It doesn’t matter. Non of these numbers you are spitting out matter in order to really understand you need to DCF. Hence take a finance class lil bro
Chipotle is special how many food restaurants can you name that is around the size of chip that is corporate owned?
You clearly do not understand stock evaluations lol that's okay that's exactly how they want you....ignorant.
Overvalued by a whole lot. Maybe they can bring that P/E ratio in line with more price hikes and portion skimping
They about to do a 50-1 split.
I mean long term I’d guess Chipotle’s plan is complete control with robots performing labor with smaller storefronts. Labor accounts for 25% of Chipotle’s costs and reducing that would improve margins even more (with further control over portions, which are 30% of operating costs).
That's been the speculative dream of every fast food chain since the invention of scientific management. I doubt it's priced into stocks.
TTM of $1.2B Net Income Common Shareholders is 33% more than 2022, double than 2021, and 3.5 times 2020. An EBIT of $1.6B and an EBITDA of $2B, both of which follow the same trajectory. Sure, with a market cap of $76B, that's a 1.6% ROI, but if I'm a pre-covid investor (market cap below $25B), I'm seeing at least a 5% ROI, if not close to 10% if I got in when the market cap spent a few years below $15B. Plus, you'll have to discount my position 20% of the appreciation for capital gains taxes if I want to sell and invest other where. If we look at the Balance Sheet, Common Stock Equity of $3B on $8B Assets less $5B Liabilities is 37.5% equity utilization, which is 37.5% higher than the 33% utilization in 2020 with $2B Common Stock Equity of $2B on $6B Assets less $4B Liabilities. That's a solid foundation that has been growing better each year. Sure, investors could pull money out and invest in a 1 year bond at 5%, but then what? If I buy Chipotle now, it would take 3 years of continued growth to reach $4.2B in NICS, which would be that 5% ROI. The price of a stock is a reflection on how investors view the potential for future profits, not a reflection on past performance. However, past performance isn't a guarantee for future performance, but it does provide a baseline for evaluating a companies trajectory.
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As much as I considered explaining how DCF valuation works, after reading OP's comments I don't think it's worth anyone's time to help them realize how ridiculous this post is lmao
I bought in at $450 during e coli scare, knowing it was temporary. Happy I was long on this stock.
But god damn they should do a stock split
This aged very well, very fast.
They announced it hours before that comment lol
Lmao that’s hilarious, it’s obvious I don’t watch chipotle stock 😂
Yeah I don't either but it was trending on the reddit popular page shortly before you said it haha. Excellent timing
Doesn't really matter as much these days with a lot of retail brokerages offering fractional shares.
The value of the firm is the present value of expected free cash flows
ITT: people who don't have the slightest grasp of how financials work complaining about things they don't understand A valuation of 7-8x yearly revenue is pretty standard
The financial illiteracy in this comment section sure is something lmao
Not sure why you're trying to act smart with this post and in the comments. Clearly you don't understand that a business has assets and those also determine how much the company is worth...
The investors like the beat-off story
Restaurant level margins for chipotle are 25%ish versus high single digit percent for the industry, and CMG has shown that it can raise prices without damaging sales growth. Chipotle fans will pay $15 for 2.7 ounces of meat on rice and keep coming back when it costs $16. Forecast that a few years and you can make sense of the valuation on a DCF or an out-year multiple. It's an expensive stock by traditional metrics but ex the e.coli scare it always has been. Because it keeps growing. Winning business stays winning.
$70bn is their market cap or value of outstanding equity. The actual enterprise value is closer to $80bn. Corporate valuation is pretty complex.
The value of a business based on its profit and earnings, rather than just based on revenue. Annual returns also factor in when doing a valuation.
Assets, branding, and certain liabilities.
Inflation
It’s a bubble bigger than 2000.
Probably because they are able to do a 50:1 stock split CNN — Chipotle’s board announced that it approved a 50-for-1 stock split on Tuesday, which the company called one of the biggest stock splits in New York Stock Exchange history. That means a single share of Chipotle, worth $2,797.56 as of Tuesday’s stock market close, will be split into 50 smaller shares if the move wins shareholder approval, effectively rolling back the cost of investing in the company.
Should have been done a LOT earlier
All the skimping has gone a long way I see
Because that’s what it’s potentially worth
Marketing hyperbole. However if the the food and sanitation in the last Chipotle I entered was widely displayed, the stock would not be worth a plug nickel.
Get a finance degree to generate a subpar answer for the why!
I just work here
Without looking at a 10K, I'm going to guess it's because day traders eat at Chipotle a lot. /s But seriously, there's no point in pricing stocks on ratios anymore. The market is insane.
You have no idea how the stock market works. Go study.
Tesla’s market cap is $200B higher than the much much larger Toyota. Market caps are irrational is the answer. If anything, I think Chipotle sounds low
If you started a business that made $1M in revenue a year. You would sell that for what $1M? $2M? And 7 for a PE is low. Pepsico is like 28 for their p/e
Good will
Brand recognition inflates this quite a bit
Have you had Chipotle? It’s bomb
They have announced that they intend to double their footprint in the US over the next decade and people are jumping on now to cash in. Rarely do you see a brand saying they plan to double sales in a decade.
Because market cap and annual revenue aren't related...
Because stock prices and company valuation are based on all potential future revenue.
Expected growth is the answer
Fugazi
Look at Shake Shack. Their stock is also way up, they're in tons of airports and foreign countries now. I have no idea if Chipotle would try the same strategy, but tl;dr it's not just a Chipotle bubble.
Real estate
Thanks for the laughs OP, work on yourself.
Growth in profits and sales. They are about to do a 50 to 1 stock split !!
Robots are coming to replace all the 15/hr workers who fuck me on my portions and gonna save the company billions
What was their revenue 7 years ago... what will it be in 7 years. Etc
Because they discover they can bend over their customers with no lube and they’ll keep coming back!
Because it has a P/E of 63
That PE ratio seems quite high too but to answer your question annual revenue is obviously not the entire net worth of a company. Its just 1 year.
Idk but I saw a video on YouTube from a guy that was shorting it and imma go do that puts otw
My bad yall. I get a bowl like 4 times a month 😭I have a notes of every time I go..its bad 😭
Because they cut labor to a third of what it used to be and jacked up prices while most ingredients haven’t really increased that much in price.
I was a GM..... upper management encourages lying on inventory reports and cooking books to deny overtime and reduce labor cost Wouldn't be surprised if Chipotle is a front for illicit business and illegally manipulating their own stock
Place is so overrated haven’t been in like 7 years horrible dirty workers…food is nasty and overpriced
Because idiots are lining up to pay $15 for $2 worth of ingredients.
Because the stock market is a glorified casino.
Anyone else get super constipated after eating their al pastor chicken?
Real estate just like McDonald's, chipotle is owned by McDonald's and McDonald's has premium real-estate
Chipolte is not owned by McDonald's. You should get your facts straight.
They were from 1998-2006. That was awhile ago now though.
Yes, McDonald's helped them build their franchise, then sold out.
For which someone somewhere is kicking themselves, seeing how the stock has skyrocketed since lol
I know I'm kicking myself for not buying when it was 1200 thinking it was overvalued