Chipotle Stands to Gain From Store Growth, Increased Consumer Spending

Aug. 2.10 | About: Chipotle Mexican (CMG)

Chipotle (NYSE:CMG) competes with McDonald’s (NYSE:MCD), Wendy’s/Arby’s Gr (NASDAQ:WEN), and Burger King (BKC) in the fast-food category. We currently have a Trefis price estimate of $139 for Chipotle’s stock, about 6% below the current market price of $147.

Trefis members have created forecasts for two key drivers of Chipotle’s stock over the last week: (1) Average Spend per Visit and (2) Number of Restaurants. The members forecasts suggest that Average Spend per Visit and Number of Restaurants will trend slightly above the Trefis forecast. These projections suggest a combined upside of around 15% for Chipotle’s stock.

We estimate that Company-Owned Restaurants account for almost all of Chipotle’s stock (around 95%). Hence the stock is very sensitive to (1) Average Spend per Visit and (2) Number of Restaurants. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

1. Average Spend per Visit

The average of forecasts for Average Spend per Visit created by Trefis members indicated a projected increase from $10.60 in 2010 to $15.20 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from $10.80 in 2010 to $14.20 by the end of the Trefis forecast period. The member estimates imply an upside of 7% to the Trefis price estimate for Chipotle’s stock. In the past, Average Spend per Visit has increased from $8 in 2005 to $10.50 in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Chipotle’s stock to Average Spend per Visit.

2. Number of Restaurants (End of Year)

The average of forecasts for Number of Restaurants created by Trefis members indicated a projected increase from around 1,054 in 2010 to 1,831 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 1,076 in 2010 to 1,686 by the end of the Trefis forecast period. The member estimates imply an upside of 8% to the Trefis price estimate for Chipotle’s stock. In the past, Number of Restaurants has increased from 489 in 2005 to 956 in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Chipotle’s stock to Number of Restaurants (End of Year).

Disclosure: No positions