Chipotle Mexican GrillCompany Analysis

James GaffiganZachary Hylton

Jordan SchwartzNicholas Pycha

OverviewFounded:1993, ColoradoIndustry: fast casual food1,300 restaurants globallyRestaurant chains in:

◦35 states in U.S◦District of Columbia◦Ontario, Canada◦Europe

(Zack's, 2012)

OverviewServes:

◦Burritos and burrito bowls◦Tacos◦Salads

Food with Integrity Policy◦Fresh Ingredients◦local produce ◦Naturally raised animals

(Zack's, 2012)

Investment Decision

Not a good long-term investment◦Fierce competition: Taco Bell and Qdoba◦Overvalued stock price/ lack of dividends◦Current legal issues

(Mussi, 2012)

Jordan Schwartz

SWOT Analysis◦Chipotle vs. Taco Bell

Sustainable resources◦Food with Integrity vs. Cantina Bell

SWOT AnalysisStrengths

◦Sustainable resources: Food with Integrity◦Marketing programs◦Minimal growth

Weaknesses◦Irregularities in work authorization

documents ◦Increased labor costs

(EBSCO, 2012) & DATAMONITOR: Yum! Brands, Inc. (2010, September 2)

SWOT AnalysisOpportunities

◦Focus on expansionThreats

◦Fierce competition ◦Increasing costs

(EBSCO, 2012)

James Gaffigan

Competitive factorsBusiness in the news

Competitive FactorsCurrent and potential earningsMergers and acquisitionsAny development of a new productNews

(How the Market Works, 2012)

Business in the NewsRounding price of foodLegal issuesFinancial prospects disclosed incorrectlySubstantial drop in stock price

(Torrisi, 2012) (Olsen, 2012)

Zachary Hylton

Financial Analysis◦Significant factors

Gross Profit Net Income P/E Ratio Earnings Per Share

(Zack's, 2012)

Gross Profit

Gross Profit (in millions)

0 2,000 4,000 6,000 8,000

QdobaTaco BellChipotle

(Zack's, 2012)

Net Income

Net Income (in millions)

020

040

060

080

01,0

001,2

001,4

00

QdobaTaco BellChipotle

(Zack's, 2012)

(zacks.com)

P/E Ratio

FY Estimates

0 5 10 15 20 25 30 35

QdobaTaco BellChipotle

Earnings per Share

Diluted EPS

0 1 2 3 4 5 6 7 8

QdobaTaco BellChipotle

(Zack's, 2012)

Stock Prices

Sept '08 Sept '09 Sept '10 Sept '11 Sept '120

50100150200250300350400

ChipotleTaco BellQdoba

(yahoo.finance.com)

DividendsCompany Yield Annual Div. Payout RatioChipotle -0- -0- -0-Yum Brands 1.93% $1.34 .36

(zacks.com)

Nick Pycha

Analyst's Evaluations ◦Standard and Poor’s◦Zacks Investment

Conclusion: Our recommendation

Standard & Poor’sCurrent recommendation: HoldRisk assessment: Medium riskValues CMG stock price at $278.20 per

share◦Overvalued by $58.20 or 17.3%

(Standard & Poor’s, 2012)

Zacks Investment ResearchZacks Rank: 3- Hold

Recommendation: Neutral

Failed to meet estimations◦Earnings per share◦Revenue

(Zack's, 2012)

Conclusions

Fierce competitionOvervalued stock price/ lack of dividendsCurrent legal issuesRecommendation: YUM Brands