Key Takeaways
- Chipotle Mexican Grill shares rose 6% today after McDonald’s beat on third-quarter earnings and lifted restaurant stocks, including Yum! Brands and Starbucks.
- McDonald’s U.S. comparable sales slipped, while Chipotle grew traffic for a third straight quarter, led by lower-income diners.
- Taco Bell’s U.S. same-store sales fell 4% in the third quarter, while Chipotle is winning budget-conscious diners.
- Chipotle’s forward P/E is well below its five-year average, but its restaurant margin is still shrinking.
Chipotle Mexican Grill (CMG) stock jumped 6% today with no news of its own. McDonald’s beat third-quarter profit estimates this morning with adjusted EPS of $3.57, up 11%, even as revenue missed and U.S. comparable sales slipped 0.2%. Restaurant stocks rallied with it.
Yum! Brands (YUM), which owns Taco Bell, climbed 6% a day after its own report, and Starbucks (SBUX) rose 5%.
Chipotle has the traffic
Chipotle is already winning the diners McDonald’s is chasing. It grew comparable sales 2.1% in the third quarter on 0.8% more transactions, its third straight quarter of traffic growth. CEO Scott Boatwright said lower-income customers did better than higher-income ones for the first time in about two years.
Taco Bell is fighting for those same diners, and its U.S. same-store sales fell 4%, against a 7% gain a year earlier. My read: Chipotle took some of those customers. But Yum CEO Chris Turner said that since the end of September, Taco Bell U.S. has been “outpacing the QSR industry on same-store sales growth.”
Starbucks’ U.S. comparable transactions grew 2.4% in its quarter to Sept. 27. With every big name up today, I’d judge Chipotle on its own numbers.
TIKR tracks 35 analysts on Chipotle Mexican Grill. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Chipotle Mexican Grill, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Chipotle Mexican Grill’s Analyst Ratings
Cheap, but the margin needs work
Analysts expect Chipotle’s normalized EPS to dip to $1.09 this year, then climb to $1.33 in 2027 and $1.54 in 2028:
McDonald’s quarter shouldn’t move those estimates, since Chipotle gave its fourth-quarter guidance only a week ago.
The stock also trades well below its own history: 26x forward earnings at the last close, against a five-year average of 41x.
At today’s price, it’s about 27x.
The catch is the restaurant margin, which fell to 23.3% in the third quarter from 24.5% a year earlier. Management’s mid-24% baseline for 2027 assumes transactions grow at least 1%, a bit more than the third quarter’s 0.8%.
At the end of the day, Chipotle is winning budget-conscious diners at a multiple well below its usual level. Of course, we’ll find out early next year whether it delivered the roughly 2% fourth-quarter comparable sales growth it guided to.
So what is Chipotle stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Chipotle could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
