Image: Chipotle Mexican Grill.

Shares of Chipotle Mexican Grill (NYSE:CMG) have performed very well for investors in the past few years. The price has surged over 650% over the past five years and just this month broke the $700 mark for the first time. The reasons seem obvious when you look at at how well the company has been able to raise earnings. In Chipotle's recent quarterly earnings report, the company posted 49% year-over-year earnings growth.

However, it's not earnings growth that's most exciting for Chipotle's continued growth, but instead its cash flow growth. In light of this metric in the past and going forward, Chipotle's share price continue to surge to over $1,000 a share in the next few years.

Here's how.

Valuing cash flow instead of earnings
There's no way to look at Chipotle and see a value in purchasing a company for 55 times earnings. Looking at this metric alone would give investors little reason to invest at such a premium, especially compared with competitor McDonald's (NYSE:MCD), which trades at a P/E of just 17. 

But Chipotle has also generated a compounded annual cash flow growth rate of more than 23% over the past three years, growing to levels much higher than at McDonald's. As of now, Chipotle trades at 48 times free cash flow, which is the price divided by FCF per share. If the company can continue to grow its cash flow even at a much more conservative 15% over the next few years, while maintaining the same price-to-cash flow ratio, the share price will reach $1,000 in 2017. 

CMG Free Cash Flow Per Share (TTM) Chart

CMG Free Cash Flow Per Share (TTM) data by YCharts

Will cash flow really continue to grow that much?
Chipotle's successful FCF growth has come from its extremely low debt load, meaning the company doesn't need to use its cash to pay for debt expenses. It's also not investing much more in new buildings this year than it did in 2014. The company built nearly 200 new locations last year, and it's set a similar target for 2015.

Meanwhile, the company will continue to grow revenues and cash flow from the investments it's made in the past couple of years. In particular, around half of Chipotle's total locations -- about 800 out of over 1,700 -- were built in just the past four years. Sales from these new stores, together with rising comparable-store sales and the lack of a large increase in investing or operating costs, should mean that free cash flow will continue growing at least at an average of 15% a year for the next few years.

Is 40 times free cash flow too expensive?
Chipotle's P/E of around 55 makes it an expensive stock to own. Even its price-to-FCF figure of 48 is much higher than the 21 at McDonalds. But going by price-to-FCF also makes it look a lot closer to having a reasonable valuation. And while the lower price-to-cash flow figure looks attractive for its value at McDonald's, its not giving investors much reason to believe in continued cash growth. The premium price-to-FCF valuation for Chipotle comes with quarter after quarter of steadily rising free cash flow -- all the way to that possible $1,000-per-share mark within a couple of years.