Stock Analysis on Net

Chipotle Mexican Grill Inc. (NYSE:CMG)

$24.99

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

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Economic Profit

Chipotle Mexican Grill Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


The analysis of the financial data reveals notable trends in profitability, capital efficiency, and value creation over the five-year period.

Net Operating Profit After Taxes (NOPAT)
NOPAT has exhibited a consistent upward trajectory from 613,981 thousand US dollars in 2020 to 1,706,003 thousand US dollars in 2024. This represents a significant improvement in operating profitability, with the growth rate accelerating particularly after 2021.
Cost of Capital
The cost of capital has remained relatively stable, fluctuating slightly between 16.51% and 16.85% throughout the period. The marginal increase observed in 2023 and 2024 suggests a modest rise in the required return by investors or a slight increase in risk associated with the company's capital structure.
Invested Capital
Invested capital demonstrates a general upward trend, increasing from 4,937,915 thousand US dollars in 2020 to 6,827,838 thousand US dollars in 2024. There was a slight dip in 2022, but the overall expansion indicates ongoing investment in the company's assets or operations, which may support future growth.
Economic Profit
Economic profit has undergone a significant turnaround over the period. Initially negative in 2020 and 2021 (−208,169 thousand and −120,011 thousand US dollars, respectively), it turned positive in 2022 and increased substantially thereafter, reaching 556,219 thousand US dollars by 2024. This shift signals that the company moved from destroying shareholder value in the earlier years to generating considerable economic value in subsequent years, suggesting improved operational efficiency and a return exceeding the cost of capital.

Overall, the data indicates strengthening operating performance, stable capital costs, increased capital deployment, and a marked improvement in value creation. The transition from negative to positive economic profit is particularly noteworthy, reflecting successful strategic initiatives or operational improvements that enhanced profitability beyond the capital charge.


Net Operating Profit after Taxes (NOPAT)

Chipotle Mexican Grill Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for credit losses2
Increase (decrease) in unearned revenue3
Increase (decrease) in restructuring liability4
Increase (decrease) in equity equivalents5
Interest expense
Interest expense, operating lease liability6
Adjusted interest expense
Tax benefit of interest expense7
Adjusted interest expense, after taxes8
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit losses.

3 Addition of increase (decrease) in unearned revenue.

4 Addition of increase (decrease) in restructuring liability.

5 Addition of increase (decrease) in equity equivalents to net income.

6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

7 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

8 Addition of after taxes interest expense to net income.


The financial data over the five-year period reveals a consistent upward trend in both net income and net operating profit after taxes (NOPAT).

Net Income
Net income has shown significant growth each year, starting at 355,766 thousand US dollars in 2020 and increasing steadily to 1,534,110 thousand US dollars by 2024. This represents a more than fourfold increase over the period, indicating strong profitability improvements and potentially effective cost management or revenue growth strategies.
Net Operating Profit After Taxes (NOPAT)
NOPAT also displays a continuous rise from 613,981 thousand US dollars in 2020 to 1,706,003 thousand US dollars in 2024. The growing NOPAT suggests enhanced operational efficiency and profitability, reflecting the company's ability to generate higher returns from its core operations after accounting for tax expenses.

Overall, the data illustrates robust financial performance, with net income and NOPAT improving substantially year over year. The parallel growth in both metrics underlines consistent operational success coupled with effective tax management. This positive trajectory indicates favorable prospects if the trends continue.


Cash Operating Taxes

Chipotle Mexican Grill Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision (benefit) for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Cash operating taxes

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


The data reveals a consistent upward trend in both provision (benefit) for income taxes and cash operating taxes over the analyzed periods from 2020 to 2024.

Provision (benefit) for income taxes (US$ in thousands)
Initially, there was a negative value of -61,985 in 2020, indicating a tax benefit. However, this shifted to a positive figure in 2021, reaching 159,779, and continued to increase each subsequent year, culminating in 476,120 by 2024.
Cash operating taxes (US$ in thousands)
Similarly, cash operating taxes moved from a negative amount of -130,767 in 2020 to a positive 213,319 in 2021, with continuous growth each year thereafter. The amount more than doubled from 452,292 in 2023 to 573,988 in 2024.

The transition from negative to positive tax provisions and cash payments in 2021 suggests a significant change in the tax position or profitability of the company starting that year. The steady increase in both metrics through 2024 may indicate increasing taxable income or changes in tax rates or policies applied to the company. Additionally, the gap between provision for income taxes and cash operating taxes is evident and appears to widen over time, which could point to differences in deferred tax accounting effects or timing differences in tax payments.


Invested Capital

Chipotle Mexican Grill Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Operating lease liability1
Total reported debt & leases
Shareholders’ equity
Net deferred tax (assets) liabilities2
Allowance for credit losses3
Unearned revenue4
Restructuring liability5
Equity equivalents6
Accumulated other comprehensive (income) loss, net of tax7
Adjusted shareholders’ equity
Construction in Progress8
Debt investments9
Invested capital

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of unearned revenue.

5 Addition of restructuring liability.

6 Addition of equity equivalents to shareholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction in Progress.

9 Subtraction of debt investments.


The financial data reveals consistent growth in key capital structure components over the observed five-year period.

Total reported debt & leases
There is a steady increase in total reported debt and lease obligations, rising from approximately $3.16 billion in 2020 to about $4.54 billion in 2024. The growth trend is continuous year-over-year, indicating an increasing reliance on leverage or lease obligations to finance operations or expansion initiatives.
Shareholders’ equity
Shareholders' equity shows a positive and notable growth trend, expanding from around $2.02 billion in 2020 to nearly $3.66 billion in 2024. The equity increases are more pronounced from 2022 onwards, suggesting retained earnings accumulation, equity infusion, or improved profitability driving the net asset value upwards.
Invested capital
Invested capital, representing the total amount of capital used for operations, also demonstrates an overall upward trend. It rises from about $4.94 billion in 2020 to approximately $6.83 billion in 2024, with a slight dip noted in 2022 relative to 2021. The rebound following 2022 highlights expansion or reinvestment efforts surpassing the previous year's level.

Overall, the data indicates a firm that is progressively increasing both its debt and equity bases to support growing invested capital. The increasing equity base alongside rising debt suggests balanced financing efforts, potentially enhancing financial flexibility and capacity for continued growth.


Cost of Capital

Chipotle Mexican Grill Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Operating lease liability3 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Operating lease liability3 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Operating lease liability3 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Operating lease liability3 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Operating lease liability3 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »


Economic Spread Ratio

Chipotle Mexican Grill Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in thousands)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Airbnb Inc.
Booking Holdings Inc.
DoorDash, Inc.
McDonald’s Corp.
Starbucks Corp.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


The financial data reveals notable trends in economic profit, invested capital, and economic spread ratio over a five-year period ending in 2024.

Economic Profit
Economic profit shows a significant improvement, shifting from negative values in 2020 and 2021 (-$208,169 thousand and -$120,011 thousand, respectively) to positive figures starting in 2022 ($135,263 thousand). This upward trajectory continues strongly through 2023 ($390,650 thousand) and 2024 ($556,219 thousand), indicating increasing profitability and value creation over the years.
Invested Capital
Invested capital increased steadily throughout the period, starting at approximately $4.94 billion in 2020 and rising to about $6.83 billion in 2024. Minor fluctuations occurred between 2021 and 2022, where invested capital slightly decreased from approximately $5.50 billion to $5.40 billion before continuing its upward trend. This steady growth suggests ongoing reinvestment and expansion initiatives.
Economic Spread Ratio
The economic spread ratio follows a pattern consistent with changes in economic profit. Initially negative at -4.22% in 2020 and improving to -2.18% in 2021, the ratio turns positive in 2022 at 2.51%, reflecting a return to value-generating operations. This positive trend accelerates to 6.50% in 2023 and 8.15% in 2024, indicating increasing efficiency in generating returns above the cost of capital.

Overall, the data suggests a transition from a period of economic loss to sustained economic profitability, supported by continued capital investment and improving operational efficiency. The rising economic spread ratio further confirms enhanced value creation relative to invested capital, highlighting a strengthening financial position over the analyzed timeframe.


Economic Profit Margin

Chipotle Mexican Grill Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in thousands)
Economic profit1
 
Revenue
Add: Increase (decrease) in unearned revenue
Adjusted revenue
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Airbnb Inc.
Booking Holdings Inc.
DoorDash, Inc.
McDonald’s Corp.
Starbucks Corp.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =

3 Click competitor name to see calculations.


Adjusted Revenue
The adjusted revenue demonstrates a consistent upward trend over the five-year period. Starting at approximately 6.0 billion USD in 2020, it increases steadily each year, reaching about 11.3 billion USD by the end of 2024. This growth reflects a robust expansion in the company's revenue-generating capability, achieving nearly a doubling in revenue within the observed timeframe.
Economic Profit
The economic profit shows a significant improvement from negative values in 2020 and 2021 to positive figures from 2022 onwards. In 2020, the company recorded a substantial loss of over 208 million USD, followed by a smaller loss of approximately 120 million USD in 2021. However, in 2022, economic profit turned positive, reaching 135 million USD and continued to increase substantially, culminating at over 556 million USD in 2024. This pattern indicates a turnaround in profitability, suggesting effective cost management and value creation.
Economic Profit Margin
The economic profit margin, expressed as a percentage, mirrors the trend observed in economic profit. The margin is negative in 2020 and 2021, -3.46% and -1.58% respectively, indicating that the company was not generating economic profit relative to its revenue during these years. Starting in 2022, the margin turns positive at 1.56% and continues to increase to 4.9% by 2024. This improvement suggests enhanced operational efficiency and stronger economic returns relative to revenue.
Overall Analysis
The data reflects a company moving from a challenging profitability position into a phase of robust growth and improved economic value creation. The steady revenue growth, combined with the shift from negative to positive economic profit and increasing profit margins, indicates successful strategic initiatives driving financial performance. The economic profit margin improvement highlights that the growth in revenue is accompanied by improved profitability, reflecting sound financial health and operational leverage.