Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, burrito specialist Chipotle Mexican Grill (NYSE: CMG ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Chipotle's business and see what CAPS investors are saying about the stock right now.
Chipotle facts
| Headquarters (Founded) | Denver (1993) |
| Market Cap | $10.4 billion |
| Industry | Restaurants |
| Trailing-12-Month Revenue | $2.16 billion |
| Management | Founder/Chairman/Co-CEO Steve Ells Co-CEO Montgomery Moran |
| Return on Equity (Average, Past 3 Years) | 21% |
| Cash/Debt | $444.6 million / $3.7 million |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 15% of the 2,909 members who have rated Chipotle believe the stock will underperform the S&P 500 going forward. These bears include NewJerseyBob and All-Star naughtyguy, who is ranked in the top 5% of our community.
Just last week, NewJerseyBob just couldn't get comfortable with Chipotle's valuation: "Sooner or later the P/E will come back to earth. Might take a while, but once people come out of their burrito-induced food comas and realize the multiple is too high, this stock will correct sharply."
In fact, Chipotle trades at a particularly lofty P/E of 52. That represents a clear premium to other restaurant stocks such as McDonald's (NYSE: MCD ) (19), Starbucks (Nasdaq: SBUX ) (27), and Yum! Brands (NYSE: YUM ) (22).
CAPS member naughtyguy elaborates on the Chipotle bear case:
When they have an earnings report showing a slow down in same store revenues the stock will take a dive. I think their novelty will wear off and people will go back to real Mexican restaurants. If the regular Mex. restaurants start offering organic where will that leave [Chipotle]?
What do you think about Chipotle, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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