Chipotle Mexican Grille

1. There are few reasons why chipotle P/E to decline, one of the major reason was recent widespread of E. Coli outbreak from food, uncertainly of each store to achieve restaurant sales change in consumer preferences or decrease in spending, changing menu prices, impact on competition, plans to expansion sites, cost of materials(food supplies). My consideration for P/E would be what’s shown on given data from company snapshot which is 30.7. The reason I chose this is by analyzing past financial statements revenue has grown about 30% from 2010 to 2015, EPS shows 15.36 which is not the most effect way to measure a its company but popularly of Chipotle which make sense. Comparing to consumer/fast food industry even thou Chipotle does not consider self as fast food, Chipotle have ability to grow fast due to customer base and loyalty and also consider as health option among fast food market. When it comes to financial strength Chipotle has more cash than liability, which can be healthy help chipotle sustain itself in the face of any turmoil and possible to make a stock buyback. Chipotle has consistently retained profit, which could Chipotle in strong position to invest for the future, by expanding to territory, new equipment, investing in R&D.

2.

g= 0.18

2015 2016 2017 2018 2019 2020 2021

CFFO 683 806 951 1,122 1,324 1,563 1,844

Cap Ex 257 303 358 422 498 588

FCF 426 503 593 700 826 975

Discount @ 11.0% 453 481 512 544 578

Sum of PVs 2569

Terminal value= EV/EBITDA = 12x

Assume EBITDA in 2020 = CFFO

Terminal Value = 1408

PV of Terminal Value= 1661

Intrinsic Value= 3069

NPV 3069

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