Chuy's Holdings (NASDAQ:CHUY) may be the perfect example of a great company but a lousy stock, unless it gets cheaper. It has an average market cap that's 10-15 times higher on a per-restaurant basis compared to Chipotle Mexican Grill (NYSE:CMG). Either Chuy's stock price needs to fall or its growth rate needs to accelerate if this fresh-Mex chain will make the same type of returns that Chipotle Mexican Grill investors have enjoyed.

Source: Chuy's

Chew on these results
On Feb. 27, Chuy's Holdings reported fiscal fourth-quarter financial results. On a similar calendar comparison basis, revenue jumped 17%. The company estimates it would have been an 18% increase, but revenue was reduced by $500,000 due to the negative effects of an ice storm. Same-store sales climbed 3%. Adjusted net income per share soared around 30% to $0.15.

CEO Steve Hislop said, "The ongoing momentum of our results is a testament to the distinctiveness of our brand and the hard work of our entire team." Hislop mentioned that Chuy's plans to open between 10-11 new restaurants in 2014 to hit its target growth of 20%. Twenty percent isn't bad; but with only 50 restaurants to start, any growth would show strong percentage numbers. Still, Chuy's must start somewhere.

The company is calling for adjusted earnings per share of between $0.81 and $0.84 for 2014, or growth of between 17% and 21%. Same-store sales are expected to grow between 1.5% and 2%.

These numbers are OK, but they're nothing to write home about, especially for such a small chain. You're kind of left wanting more in the way of growth. This is even truer considering such a large market cap of nearly $700 million, which values each of the 50 restaurants at nearly $14 million. True, the market is a forward-looking machine, but it seems like it's pricing many years of aggressive and successful growth into the stock already.


Source: Chipotle Mexican Grill

Wrapping up Chipotle
Compare the market value of Chuy's Holdings' 50 restaurants to the 1,700-plus Chipotle Mexican Grill locations. While each Chipotle Mexican Grill restaurant is not a full-service location, a margarita-serving restaurant like Chuy's is, and each Chuy's is valued at 14 times the value of each Chipotle's based on market cap.  On average, each Chuy's has more than double the sales and net income so a higher value make sense, but 14 times seems overpriced..

Last quarter, Chipotle Mexican Grill's revenue leaped 21%. Same-store sales jumped 9%, while net income zoomed 30%. All of these percentage figures met or beat the percentage growth numbers of Chuy's despite Chipotle's much larger size.

Chipotle is only expecting to add between 10%-12% to its location number next year compared to Chuy's; but once again Chipotle expects much faster same-store sales growth.

Given all of this, does Chuy's deserve to trade with a P/E in the 40's just like Chipotle Mexican Grill? Perhaps a strong case can be made that neither one does.

Foolish final thoughts
Chuy's caters to a segment of the economy that is hurting a bit more than the fast-casual dining industry. Fast casual is growing in popularity, and it is the market segment that Chipotle Mexican Grill serves. 

If the economy picks up, Chuy's may eventually end up being the better value. It would be nice to see its same-store sales growth pick up the pace or its unit-growth plans kick into higher gear in 2015.

Fools should watch this small chain's unit expansion progress closely as well as its stock price. In a perfect world, there will be a cheaper entry and faster restaurant unit expansion plans unveiled later this year.

Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill. The Motley Fool owns shares of Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.