Chipotle Mexican Grill, Inc. (CMG), Yum! Brands, Inc. (YUM), McDonald’s Corporation (MCD), Who’ll Continue To Soar?

Over the last few years, Chipotle Mexican Grill, Inc. (NYSE:CMG) has been a dream stock and has helped investors accumulate fortunes. This has been made possible by its aggressive expansions in the U.S., which somewhat revolutionized the Mexican cuisine in the country.

As a result, its shares have risen nearly 220% over the last five years, while shares of Yum! Brands, Inc. (NYSE:YUM) and McDonald’s Corporation (NYSE:MCD) have risen around 65% and 72%, respectively. But even after its recent rally, Chipotle looks attractive with its growth prospects still intact.

Improving fundamentals

Chipotle Mexican Grill, Inc. (NYSE:CMG) had successfully opened around 145 new stores in 2011, 183 new stores in 2012, and plans to open around 180 new stores in 2013. Currently, the Mexican food chain operates just under 1,500 stores, and the new store openings this year could take its store count to over 1,600.

But, this is nothing compared to over 33,000 stores of McDonald’s Corporation (NYSE:MCD) and over 39,000 outlets of Yum! Brands, Inc. (NYSE:YUM) spread around the world. However, it is the small size of Chipotle Mexican Grill, Inc. (NYSE:CMG) which has allowed the company to report a 50% plus growth rate in 2009, 2010, and 2011.

For the recent quarter, the company reported diluted EPS of $2.45, an impressive jump of 24.4% compared to last year’s quarter. Although inflationary pressures knocked off 110 bps from its restaurant margins, Chipotle was able to report 160 bps lower SG&A expenses. Its comparable sales improved 1%, but its overall sales spiked 13.4% on the back of new store openings.

The chart attached above displays the relative growth in operating cash flows, while the chart attached below displays the improvements in gross margin.

Chipotle Mexican Grill, Inc. (NYSE:CMG) has been reporting tremendous growth in its cash flows and has been improving its profitability along with store additions. That is indeed commendable, since its larger peers have been unable to beat the inflationary pressures and have had flat margins over the same period.