Chipotle Mexican Grill, Inc. (CMG) Stock Rises Again: Is There More Room to Run?

When these menu price increases occur (probably in 2014), they should offset the cost increases. However, it’s not clear that Chipotle Mexican Grill, Inc. (NYSE:CMG) can raise prices enough to drive significant margin expansion, as opposed to simply recovering the increased costs. Without this margin expansion, Chipotle is unlikely to grow earnings fast enough to justify a higher stock price than the current $400 range. As a result, Chipotle stock doesn’t seem like a good investment opportunity at this time.

Foolish bottom line
Chipotle Mexican Grill, Inc. (NYSE:CMG) has proved doubters wrong time and again by posting consistent revenue and earnings growth throughout its national expansion. Even the recent challenge from Taco Bell hasn’t had a noticeable effect on Chipotle’s financial performance. Chipotle stock has risen accordingly, rewarding long-term investors.

However, as my colleague Dan Caplinger astutely pointed out last week, sometimes a great company doesn’t have a great stock. Chipotle Mexican Grill, Inc. (NYSE:CMG)’s stock price already incorporates all of the upside that can be reasonably expected from the company’s performance. Investors who missed out on the recent run shouldn’t risk compounding their frustration by buying Chipotle stock today when it already trades at a high valuation.

Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Chipotle Mexican Grill.

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