Why Chipotle is Poised to Underperform

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, and see what CAPS investors are saying about the stock right now.

Chipotle facts

   

Headquarters (founded)

Denver (1993)

Market Cap

$9.4 billion

Industry

Restaurants

Trailing-12-Month Revenue

$2.6 billion

Management

Founder/Chairman/Co-CEO Steven Ellis

Co-CEO Montgomery Moran

Return on Equity (average, past 3 years)

23.3%

Cash/Debt

$573.9 million / $3.6 million

Competitors

Panda Restaurant

Qdoba Restaurant

Taco Bell

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 14% of the 3,195 members who have rated Chipotle believe the stock will underperform the S&P 500 going forward.

A couple of months ago, one of those Fools, badducky, showed skepticism over Chipotle's growth potential:

I think we're seeing the kind of saturation and copycatting competitors that makes huge expansion difficult. Naturally, this explains the Asian [ShopHouse] experiment. With no explosive growth realistically present with just burritos, they need to do the magic again with another restaurant brand. Being a successful and explosive restaurant chain is very, very hard to do once. Twice is not impossible, because the talent is present, but it is certainly not probable in the best of circumstances.

Of course, this short pitch doesn't even come close to telling the entire story for Chipotle. You're in luck, though. The Fool's brand new premium report on Chipotle tells all sides of the story for one of the most compelling restaurant plays in the world. You can grab your copy now, which comes with free updates for 12 months, by just clicking here.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.


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