DCF Analysis of Chipotle Mexican Grill

Hello! So today, when I should have been studying for finals, I instead decided to do a DCF analysis of Chipotle. I started out running a conservative model and an optimistic model, but as you will see the conservative one was a bit too conservative and the model got messed up quite a bit. I left it there for you to see, but I did not continue on and use that data for CAPM, WACC, and the Enterprise Value calculation. I am still very new at this and would really like feedback on wrong growth parameters that I used, or if I messed up on the Terminal Value calculation. As you will see, I used the perpetuity calculation for forecasting cash flows out into the future.

DCF MODEL

Basically, after combing through all of the data, you will see that I predict Chipotle to have a per share price of somewhere between $100-228 dollars. Chipotle is currently trading at $330 per share. Either I am a genius and we should all short Chipotle's stock, or I messed up somewhere and Wall Street has it correct. I am highly favoring the latter being the case, as this is one my first times taking a real stab at the DCF valuation method.

I am positing that I either messed up in the TV calculation, or the forecast for Chipotle's revenue growth rate. Of course, there are a number of place I could have messed up. Hopefully sharing this will allow someone out there with experience to be able to comment and help me out!

I would not take this as me saying, DON'T BUY CHIPOTLE! SHORT THE SON OF A GUN! No, no, that's not what I am saying at all. I probably messed up somewhere. Anyway, it was a great learning experience and I look forward to doing another one soon, after finals are over.

What to expect for tomorrow?

The pre market is up currently. The S&P is up .77%. We should expect a mediocre day tomorrow. It is possibly up on news of the European leaders coming together with a solution for their economy.
I pulled this from the New York Times,

"The new euro package, as European and American officials describe it, is being negotiated along four main lines. It combines new promises of fiscal discipline that will be embedded in amendments to European treaties; a leveraging of the current bailout fund, the European Financial Stability Facility, to perhaps two or even three times its current balance; a tranche of money from the International Monetary Fund to augment the bailout fund; and quiet political cover for the European Central Bank to keep buying Italian and Spanish bonds aggressively in the interim, to ensure that those two countries — the third- and fourth-largest economies in the euro zone — are not driven into default by ruinous interest rates on their debt."

We will see what happens. They are hoping to piece together a resolution for a summit meeting in Brussels this week. That's it for me today. Have a great evening everyone.

Cheers,
EZ