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Chipotle Mexican Grill, Inc. (CMG) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Chipotle Mexican Grill, Inc. (CMG)

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Intrinsic Value (DCF)

Current$40.36
→
Intrinsic$39.29
-3%
$25.36$39.29$66.95
Market implies 25% growth for 5 years
CMG appears fairly valued — current price aligns with our DCF estimate.
At $40, the market prices in continued strong cash flow growth (25%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $25 → Bull $67. Current price implies expectations near the base case.
Discount ↓Growth →21%23%25%27%
8%$51$55$59$64
10%$33$36$39$43
12%$24$26$29$31
14%$19$20$22$24

Bull Case

  • Bull case ($67) offers 66% upside at 30% growth, 8% discount

Bear Case

  • Bear case ($25) implies 37% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.89B
Year 2$2.36B
Year 3$2.95B
Year 4$3.69B
Year 5$4.61B
Terminal$73.09B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.51BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is CMG stock undervalued or overvalued?
🔴 OVERVALUED

CMG trades at $40.36 vs. our DCF-derived intrinsic value of $32.03, implying -17% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($50.84) suggests limited upside.

What is CMG's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.51B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.79B net debt and dividing by 1.38B shares: Bear $19.65 | Base $32.03 | Bull $50.84. Current price $40.36 implies -17% to base case.

How is CMG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($47.89B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 31.7x.