Chipotle Mexican Grill (CMG 1.85%) reported massive revenue and earnings gains in its second-quarter earnings report released Tuesday, and the company's stock price soared by more than 11% in Wednesday trading following this news.

The fast-casual restaurant chain's stock price has risen to record levels, and forecasts suggest that Chipotle will not sustain its current growth rate. Such factors raise the question of whether investors have missed the opportunity to profit from Chipotle stock.

Let's take a closer look and see if we can find an answer.

Customers eating burritos inside a fast food restaurant.

Image source: Getty Images.

The earnings report

Admittedly, the company's quarterly report included many positive metrics worth reviewing. During the first six months of 2021, Chipotle earned about $3.6 billion in revenue, a 30% increase from the first six months of 2020. In comparison, Chipotle's net income rose 272% during that period to $315 million as operating costs increased by only 19%. The increase also occurred despite Chipotle provisioning $91 million for income taxes for the first two quarters of 2021, a stark contrast from the income tax benefit of $15 million it received during the first half of 2020.

The Q2 numbers also mark a dramatic improvement from fiscal 2020, when revenue grew 6% compared with 2019 levels to $5.9 billion. During that time, net income rose by less than 2% to $356 million as pandemic-related challenges took operating costs higher by 11%.

Amid COVID-19, Chipotle suffered less than most peers in the restaurant industry due to its well-developed takeout business and its ability to offer food delivery. Now, even with concerns about the delta variant of the coronavirus, the stock has benefited as the company has largely moved beyond pandemic-related shutdowns. Consequently, Chipotle stock price has risen by close to 50% over the last year and by around 110% since the start of 2020.

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Watch the valuation and forecasts

However, the question for investors hinges on whether these successes justify its current price-to-earnings multiple, which now exceeds 120. While not a record, investors should note that the spring correction in the stock price occurred after the P/E ratio reached 125. Also, before the pandemic, its earnings multiple often fell below 80 and rarely exceeded 100.

Moreover, it appears investors to this point have chosen to focus on the most optimistic figures at the expense of numbers related to the recent past and the near future. For example, the company reported a 31% increase in comparable restaurant sales between Q2 2020 and the second quarter of 2021. Still, higher menu prices drove much of that increase. Also, Q3 guidance points to a comparable restaurant sales increase in the "low to mid-double-digits range."

Company management also stated in its guidance an intent to open 200 restaurants in 2021. Chipotle operates 2,853 locations as of the end of Q2, with only 20 located outside of North America. Additionally, on its Q2 2021 earnings call, it communicated a goal of eventually operating 6,000 restaurants in North America (although no time frame for reaching that total was given).

Nonetheless, other than predicting a full-year tax rate between 25% and 27%, Chipotle offered no additional guidance. This seems to point to near-term uncertainty as economic reopenings continue.

Is it too late?

In a long-term sense, investors likely can still profit from the stock over time. Chipotle's reaction to the pandemic proved the strength of its business model. Moreover, it continues to open new restaurants, and the forecasted double-digit percentage increases in comparable restaurant sales will probably lead to rising profits over time.

However, valuations have risen above historical averages at a time when the company believes growth could slow. This increases the likelihood that the restaurant stock will struggle in the near term.