This is a step-by-step stock review to answer the question, is Chipotle (CMG) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Chipotle (CMG) stock a good buy?
1. Chipotle Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founded in 1993 by Steve Ells in Denver, Colorado.
- Vision: Serve high-quality, delicious food made from sustainably sourced ingredients.
- 1998: Received an investment from McDonald’s, which fueled rapid expansion.
- 2006: Went public with an initial public offering (IPO).
- Food Philosophy: Introduced “Food With Integrity,” emphasizing organic and local produce, responsibly raised meat, and sustainable farming.
- Menu: Focused on customizable burritos, bowls, tacos, and salads.
- 2015: Faced E. coli and norovirus outbreaks, leading to significant changes in food safety practices.
- 2018: Appointed Brian Niccol as CEO, focusing on digital innovation and operational efficiency.
- Digital Transformation: Launched Chipotle app and improved online ordering, leading to increased sales.
- Sustainability: Committed to reducing greenhouse gas emissions and waste, and improving animal welfare.
- Community: Supports local farmers, educational programs, and disaster relief efforts.
- Today: Operates over 2,800 locations across the U.S., Canada, U.K., France, and Germany.
- Mission: Continues to offer responsibly sourced, delicious food while promoting sustainability and community support.
Chipotle’s journey reflects its dedication to quality, sustainability, and customer satisfaction. From a single restaurant to an international presence, Chipotle remains committed to serving “Food With Integrity.”
2. MOS (Margin of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: watch
- Score: 95/100
- MOS: 24%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Chipotle (CMG) makes money:
- Selling burritos, bowls, tacos, and salads in their restaurants.
- Offering online ordering and delivery through their website and app.
- Charging for extra toppings like guacamole and queso.
- Selling branded merchandise like clothing and accessories.
- Generating revenue from catering orders for events and parties.
Chipotle uses these various streams to maximize their earnings and provide diverse services to moviegoers.
Here are a few of the other companies that Chipotle has acquired over the years. This is important because a company will use a “Buy before build” philosophy to go to market faster and add additional streams of revenue. A company with more revenue streams has a more stable business model. Keep in mind, that most companies don’t build new software because it takes too long to go to market and generate revenue.
- Pizzeria Locale
- ShopHouse Southeast Asian Kitchen
- Tasty Made
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Chipotle (CMG) stacks up against other companies.
- Chipotle Mexican Grill, Inc. (CMG) – 95
- Arcos Dorados Holdings Inc. (ARCO) – 89
- Shake Shack Inc. (SHAK) – 78
- Dutch Bros Inc. (BROS) – 72
- McDonald’s Corporation. (MCD) – 72
- Yum! Brands, Inc. (YUM) – 67
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Brian Niccol became the CEO of Chipotle in 2018.
- He revitalized Chipotle’s brand image and customer experience, focusing on food quality and innovation.
- Niccol introduced digital initiatives like mobile ordering and delivery partnerships, boosting sales and customer engagement.
- He implemented menu innovations, including new menu items like queso and lifestyle bowls, to attract diverse customer preferences.
- Niccol emphasized food safety and sustainability, improving Chipotle’s reputation and trust among customers.
- He expanded Chipotle’s presence internationally, with new locations opening in Canada, Europe, and beyond.
- Niccol prioritized employee benefits and career development, aiming to attract and retain top talent.
- He led Chipotle’s response to the COVID-19 pandemic, implementing safety measures and supporting communities.
- Niccol’s strategic leadership led to significant growth in Chipotle’s revenue and stock value.
- Under his guidance, Chipotle became one of the top-performing fast-casual restaurant chains, solidifying its position in the industry.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Chipotle (CMG) is 84/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Chipotle (CMG) stock a good buy?
Some of the top questions investors can have is Chipotle (CMG) stock a good buy or should I buy Chipotle (CMG) stock?
Investing in Chipotle can be appealing. Chipotle is a popular fast-casual restaurant chain known for its commitment to high-quality, organic ingredients. Its focus on sustainability and healthy eating trends resonates well with consumers. Chipotle has shown strong revenue growth and consistent expansion, with successful digital and delivery platforms boosting sales. However, the restaurant industry is competitive, and food safety issues in the past have affected its reputation. Evaluating these aspects and staying informed on market trends is essential before investing in Chipotle.
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To truly know if Chipotle is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
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