CMG

We rate CHIPOTLE MEXICAN GRILL INC (CMG) as a Hold with a composite score of 50.5/100 at a current price of $36.59. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (63th percentile) and stability (63th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (38th percentile) and momentum (39th percentile) tempers our overall conviction. We assign a Narrow Moat rating (48/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CHIPOTLE MEXICAN GRILL INC holds a top-quartile position (#0 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 50.5/100 places it at rank #1935 in our full 7,333-stock universe. With a $52.5B market capitalization, CHIPOTLE MEXICAN GRILL INC operates at meaningful scale within the Retail Trade sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 1%, though momentum at the 39th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 24% (-12.2pp vs sector) narrow to operating margins of 17% (+13.0pp vs sector) and net margins of 13.6%, yielding a gross-to-net conversion rate of 57%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $36.59, CHIPOTLE MEXICAN GRILL INC is trading near fair value based on current fundamentals. Our value factor score of 47/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 30.7x (a 43% premium to the sector median of 21.4x), EV/EBITDA of 24.6x (at a premium), P/B of 17.3x, P/S of 4.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to CHIPOTLE MEXICAN GRILL INC. The company exhibits strong financial stability with a beta of 0.94, conservative leverage (0% D/E), and a stability factor in the 63th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 63th percentile with quality at the 63th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: conservative leverage (0% D/E) limits balance sheet risk; above-average stability (63th percentile) suggests predictable business dynamics; large-cap scale ($52.5B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate CHIPOTLE MEXICAN GRILL INC's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 56.3%, disciplined leverage (0% D/E). Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — CHIPOTLE MEXICAN GRILL INC meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 17.7% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, CHIPOTLE MEXICAN GRILL INC receives a Hold rating with a composite score of 50.5/100 (rank #1935 of 7,333). Our quantitative framework assigns a Narrow Moat (48/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 50/100.

Our analysis supports a neutral stance on CHIPOTLE MEXICAN GRILL INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.