Assessing CMG's lofty stock price
Chipotle Mexican Grill, Inc. (NYSE:CMG) hasn't been covered in this space since late July, when the fast casual restaurant giant gapped higher in the wake of a blowout earnings report. A little under two months later, how has CMG fared?
Chipotle stock’s valuation continues to be inflated at a forward price-earnings ratio of 39.22 and a price-sales ratio of 5.89. But on the charts, CMG is contending with its year-to-date breakeven level, with support in place at its ascending 30-day moving average.
Nonetheless, the restaurant company's relatively safe fundamentals have served as a justifying factor for CMG's high price. Chipotle has proven to be one of the fastest growing companies in the food industry that has remained profitable for several years as well. CMG has grown its annual revenues and net income 67.5% and 328.3%, respectively, since fiscal 2018, reporting 26.1% top line growth and 83.5% bottom line growth for fiscal 2021.
Furthermore, the restaurant business is estimated to end fiscal 2022 with a 15.8% increase in revenue and a 29.3% increase in earnings. CMG is also expected to generate 13.7% revenue growth and 29.9% earnings growth for fiscal 2023, making Chipotle stock one of the lower risk growth plays available, despite its high valuation.