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By:Haitham Alghamdi Wahida BrithbiAhmad Gesa Dung Nguyen

FINC 800Professor Ying BeckerOverviewSeven locations in Canada, six in England, three in France, and one in Germany.

Company Background

The company was founded in 1993 by Steve EllsOn IPO date, Chipotle issues 7.88 million sharesSubsequently sold 4.2 million shares in a secondary offering $61.50Overview

Food with integrity Quality ingredients 40% of their beans are organically grown 100% of all the meats from naturally raised animalsFast-casual restaurant Healthy food Affordable price.

SWOT analysis

StrengthWeaknessHigh quality and healthy foodAll restaurant are under the ownership of the company, no franchise easily to maintain quality benchmarkNaturally raised chicken and pork No debtStrong relation with suppliersPay high to employees as compared to managersNot fully expanded in the U.S.High price of food product compare to competitorOffer limited menu to the customersHigh dependency on verbal communication, customize mealOpportunitiesThreatsEco-friendly trend in designIncrease number of restaurant in US and Canada and expand more globallyIncrease more food selectionStrong directs competitors: Qdoba, Taco BellIndirect competition from McDonald, Starbuck, Yum! BrandCompetitors cost of food are lower than ChipotleEconomic slowdownRestaurant IndustryThe Current Operating Environment

Building A Digital Presence

Major competitors

Asset Utilization

Asset Management 2013CMGMCDYUMDRITotal Asset Turnover1.750.781.481.33Receivables Turnover157.5220.8642.21109.08Inventory Turnover195.51140.231.8317.51Property Plant & Equip Turnover3.511.1132.05Days Inventory1.872.611.4720.85Cash Conversion Cycle-4.92-3.53-29.938.93Profitability Analysis

Profitability Ratios 2013CMGMCDYUMDRISales (Mil)321528106130848552ROA % (Net)17.8115.5112.326.4ROE % (Net)23.5235.6950.5121.12ROI % (Operating)38.720.1224.911.72Profitability Analysis

Dupont Disaggregation Analysis

YearEquity MulitplierProfit MarginTotal Asset TurnoverROE %ROA%20091.378.35%1.7019.41%14.20%20101.389.75%1.7623.73%17.16%20111.379.47%1.7823.14%16.86%20121.3510.18%1.7624.20%17.91%20131.3210.19%1.7523.55%17.83%Liquidity and solvency analysis

Financial RatiosLiquidity Ratios

12/31/201312/31/201212/31/201112/31/201012/31/2009Quick Ratio3.022.622.952.892.69Current Ratio3.342.933.183.32.91Liquidity and solvency analysis

Company valuation

#Company nameTickerBeta1YUMYUM0.9702Burger King BKW0.8893CosiCOSI 1.4274Darden RestaurantDRI0.7745Jack in the boxJACK0.5586Panera BreadPNI0.5787Popeyes PLKI0.6778McDonalds MCD0.479Average0.866WACC Risk free rate2.18%Estimated market risk premium7.50%Beta0.866D/V 0E/V 1Tax rate40.00%Cost of debt0.00%(1-t)*Cost of debt0.00%Cost of equity8.67%WACC 8.67%Company valuation

Net Working Capital2013201420152016201720182019Horizon Total Non -cash Current Assets343,104307,524.47348,718.84389,358.76428,835.99466,663.44502,476.30536,024.56% sales10.67%8.29%8.29%8.29%8.29%8.29%8.29%8.29%Total Current Liabilities199,228247,847.68281,048.06313,801.59345,618.05376,104.88404,968.06432,006.10% sales6.20%6.68%6.68%6.68%6.68%6.68%6.68%6.68%Net Working Capital $ 143,876.00 59,676.7967,670.7875,557.1783,217.9490,558.5697,508.24104,018.464.48%1.61%1.61%1.61%1.61%1.61%1.61%1.61%Gross Assets 1,490,6351,941,272.332,256,589.062,586,224.412,927,154.903,276,665.073,632,402.043,992,391.50Accummulated Depr527,397653,318.38796,107.53955,537.421,131,131.961,322,215.631,527,963.521,747,448.34NFA963,2381,287,953.951,460,481.531,630,686.991,796,022.941,954,449.442,104,438.522,244,943.16% of Sales 34.72%Depreciation 96,054125,921.38142,789.15159,429.89175,594.54191,083.67205,747.89219,484.82% of NFA 9.78%Company valuation

(in million)Forecast period2014201520162017201820192020Sales3,726,612.164,260,830.624,810,550.555,369,129.415,930,224.026,487,982.056,877,260.97% growth15.93%14.34%12.90%11.61%10.45%9.41%6.00%Total costs2,748,376.473,142,362.593,547,781.033,959,732.944,373,540.214,784,886.765,071,979.97% sales73.75%73.75%73.75%73.75%73.75%73.75%73.75%EBITDA978,2361,118,4681,262,7701,409,3961,556,6841,703,0951,805,281% margin26.25%26.25%26.25%26.25%26.25%26.25%26.25%Depreciation Amortization:126,500.74144,634.91163,295.28182,256.37201,302.86220,236.09233,450.26% NFAEBIT$851,734.96$973,833.13$1,099,474.24$1,227,140.10$1,355,380.94$1,482,859.20$1,571,830.75Taxes (38%)323,659.28370,056.59417,800.21466,313.24515,044.76563,486.49597,295.68Profit After tax 528,075.67603,776.54681,674.03760,826.86840,336.18919,372.70974,535.06OCF654,576.41748,411.45844,969.31943,083.231,041,639.051,139,608.791,207,985.32CapEx457,142.48330,115.56354,158.04376,194.96396,114.91413,889.68368,607.90Increase/Decrease in NWC-83,924.658,594.178,843.548,986.069,026.538,972.856,262.47Unlevered Free Cash Flow281,358.58409,701.73481,967.73557,902.22636,497.60716,746.26833,114.95WACC=8.7%Discount Period=80.001.002.003.004.005.006.00Present value of free cash flow281,358.58377,014.56408,130.10434,739.49456,413.10472,952.0418,946,791.00Company valuation

OutputEnterprise valuePresent value of Free Cash Flow2,149,249,000Terminal Value31,202,807,000Discount Factor0.61Present Value of Terminal Value18,946,791,000Enterprise value21,096,040,000Outstanding shares31,015,621Implied share price680.17Current share price 660.55Percentage overprice 2.97%Recommendation

Short-Term Buy, Long-Term Hold Current Price: $660.55, Project share price:680.17Stable revenue growth in the recent 5 years. The number of restaurants will still be rising fast for the next few years Recognize revenue when food and beverage products are sold.Chipotles capital structure, currently, is 100% equity. Chipotle has a large cash balance and a strong anticipated operational cash stream in the futureThank you