Stock Analysis on Net

Chipotle Mexican Grill Inc. (NYSE:CMG)

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.


Economic Profit

Chipotle Mexican Grill Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net operating profit after taxes (NOPAT)1 1,403,018 1,025,991 788,934 613,981 515,617
Cost of capital2 15.53% 15.22% 15.24% 15.35% 14.88%
Invested capital3 6,006,837 5,396,406 5,496,598 4,937,915 4,227,370
 
Economic profit4 470,169 204,879 (48,865) (143,795) (113,492)

Based on: 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), 10-K (reporting date: 2019-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,403,01815.53% × 6,006,837 = 470,169

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Chipotle Mexican Grill Inc. economic profit increased from 2021 to 2022 and from 2022 to 2023.

Net Operating Profit after Taxes (NOPAT)

Chipotle Mexican Grill Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income 1,228,737 899,101 652,984 355,766 350,158
Deferred income tax expense (benefit)1 (17,130) (39,671) (19,829) 101,401 27,286
Increase (decrease) in allowance for credit losses2 1,562 (770) 362 1,581 7
Increase (decrease) in unearned revenue3 26,609 26,720 28,601 32,555 24,721
Increase (decrease) in restructuring liability4 (30) (3,470)
Increase (decrease) in equity equivalents5 11,041 (13,721) 9,134 135,507 48,544
Interest expense
Interest expense, operating lease liability6 206,633 177,988 160,526 155,327 147,994
Adjusted interest expense 206,633 177,988 160,526 155,327 147,994
Tax benefit of interest expense7 (43,393) (37,378) (33,711) (32,619) (31,079)
Adjusted interest expense, after taxes8 163,240 140,611 126,816 122,708 116,915
Net operating profit after taxes (NOPAT) 1,403,018 1,025,991 788,934 613,981 515,617

Based on: 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), 10-K (reporting date: 2019-12-31).

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 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 4,051,625 × 5.10% = 206,633

7 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 206,633 × 21.00% = 43,393

8 Addition of after taxes interest expense to net income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Chipotle Mexican Grill Inc. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

Cash Operating Taxes

Chipotle Mexican Grill Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Provision (benefit) for income taxes 391,769 282,430 159,779 (61,985) 108,127
Less: Deferred income tax expense (benefit) (17,130) (39,671) (19,829) 101,401 27,286
Add: Tax savings from interest expense 43,393 37,378 33,711 32,619 31,079
Cash operating taxes 452,292 359,479 213,319 (130,767) 111,920

Based on: 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), 10-K (reporting date: 2019-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Chipotle Mexican Grill Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Invested Capital

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

US$ in thousands

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating lease liability1 4,051,625 3,731,410 3,520,314 3,157,052 2,851,513
Total reported debt & leases 4,051,625 3,731,410 3,520,314 3,157,052 2,851,513
Shareholders’ equity 3,062,207 2,368,023 2,297,374 2,020,135 1,683,026
Net deferred tax (assets) liabilities2 89,109 98,623 141,765 149,422 37,814
Allowance for credit losses3 2,742 1,180 1,950 1,588 7
Unearned revenue4 209,680 183,071 156,351 127,750 95,195
Restructuring liability5 30
Equity equivalents6 301,531 282,874 300,066 278,760 133,046
Accumulated other comprehensive (income) loss, net of tax7 6,657 7,888 5,354 4,229 5,363
Adjusted shareholders’ equity 3,370,395 2,658,785 2,602,794 2,303,124 1,821,435
Construction in Progress8 (161,721) (123,453) (107,222) (76,317) (45,422)
Debt investments9 (1,253,462) (870,336) (519,288) (445,944) (400,156)
Invested capital 6,006,837 5,396,406 5,496,598 4,937,915 4,227,370

Based on: 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), 10-K (reporting date: 2019-12-31).

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.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Chipotle Mexican Grill Inc. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Cost of Capital

Chipotle Mexican Grill Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 71,856,625 71,856,625 ÷ 75,908,250 = 0.95 0.95 × 16.18% = 15.31%
Operating lease liability3 4,051,625 4,051,625 ÷ 75,908,250 = 0.05 0.05 × 5.10% × (1 – 21.00%) = 0.22%
Total: 75,908,250 1.00 15.53%

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 44,385,822 44,385,822 ÷ 48,117,232 = 0.92 0.92 × 16.18% = 14.92%
Operating lease liability3 3,731,410 3,731,410 ÷ 48,117,232 = 0.08 0.08 × 4.77% × (1 – 21.00%) = 0.29%
Total: 48,117,232 1.00 15.22%

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 43,771,326 43,771,326 ÷ 47,291,640 = 0.93 0.93 × 16.18% = 14.97%
Operating lease liability3 3,520,314 3,520,314 ÷ 47,291,640 = 0.07 0.07 × 4.56% × (1 – 21.00%) = 0.27%
Total: 47,291,640 1.00 15.24%

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 43,473,011 43,473,011 ÷ 46,630,063 = 0.93 0.93 × 16.18% = 15.08%
Operating lease liability3 3,157,052 3,157,052 ÷ 46,630,063 = 0.07 0.07 × 4.92% × (1 – 21.00%) = 0.26%
Total: 46,630,063 1.00 15.35%

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

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 23,714,120 23,714,120 ÷ 26,565,633 = 0.89 0.89 × 16.18% = 14.44%
Operating lease liability3 2,851,513 2,851,513 ÷ 26,565,633 = 0.11 0.11 × 5.19% × (1 – 21.00%) = 0.44%
Total: 26,565,633 1.00 14.88%

Based on: 10-K (reporting date: 2019-12-31).

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, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 470,169 204,879 (48,865) (143,795) (113,492)
Invested capital2 6,006,837 5,396,406 5,496,598 4,937,915 4,227,370
Performance Ratio
Economic spread ratio3 7.83% 3.80% -0.89% -2.91% -2.68%
Benchmarks
Economic Spread Ratio, Competitors4
Airbnb Inc. 13.30% 14.72% -7.54% -113.85%
Booking Holdings Inc. 17.05% 6.15% -11.26% -10.95% 30.70%
Carnival Corp. & plc -8.98% -22.59% -30.55% -33.94% -10.89%
McDonald’s Corp. 9.02% 6.23% 8.63% 4.36% 8.61%
Starbucks Corp. 9.54% 7.11% 8.38% -4.35% 0.07%

Based on: 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), 10-K (reporting date: 2019-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 470,169 ÷ 6,006,837 = 7.83%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Chipotle Mexican Grill Inc. economic spread ratio improved from 2021 to 2022 and from 2022 to 2023.

Economic Profit Margin

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

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 470,169 204,879 (48,865) (143,795) (113,492)
 
Revenue 9,871,649 8,634,652 7,547,061 5,984,634 5,586,369
Add: Increase (decrease) in unearned revenue 26,609 26,720 28,601 32,555 24,721
Adjusted revenue 9,898,258 8,661,372 7,575,662 6,017,189 5,611,090
Performance Ratio
Economic profit margin2 4.75% 2.37% -0.65% -2.39% -2.02%
Benchmarks
Economic Profit Margin, Competitors3
Airbnb Inc. 7.63% 11.62% -6.78% -174.30%
Booking Holdings Inc. 9.11% 4.91% -15.42% -23.47% 22.46%
Carnival Corp. & plc -16.40% -81.96% -744.75% -297.34% -20.04%
McDonald’s Corp. 17.71% 12.20% 17.73% 10.62% 17.40%
Starbucks Corp. 5.90% 4.53% 6.83% -4.24% 0.05%

Based on: 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), 10-K (reporting date: 2019-12-31).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 470,169 ÷ 9,898,258 = 4.75%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Chipotle Mexican Grill Inc. economic profit margin improved from 2021 to 2022 and from 2022 to 2023.