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Cheap Chipotle? Why CMG Stock Could Be Ready for a Comeback

Written by Sam Quirke. Published 10/4/2025.

Shares of fast-food giant Chipotle Mexican Grill Inc. (NYSE: CMG) have not had the year investors were hoping for. While much of the broader market has surged to record highs in 2025, Chipotle shares have spent much of the past year trending lower. The weakness accelerated after late July, with the stock falling about 30% in just two months and slipping back to 2023 levels. For a company once among the most reliable growth names in the restaurant sector, the reversal has been striking.

But with much of the pain already priced in, there are signs the worst may be behind it. On Oct. 2, shares closed right around $40, and at that level Chipotle traded on a price-to-earnings (PE) ratio of just 35—its lowest multiple since December 2015.

For nearly a decade the stock had commanded far higher valuations, often justified by strong expansion and margin growth. After the recent pullback, investors are now looking at a name that appears relatively cheap again, which has captured the attention of analysts calling it a red-hot buy. Let’s take a closer look.

Chipotle’s Valuation Hits Decade-Low Levels

For years, Chipotle traded at a premium to the broader market and its restaurant peers, supported by solid store expansion and strong pricing power. That premium has largely evaporated and Chipotle’s PE is now only slightly higher than the 30 PE of KFC, Taco Bell and Pizza Hut owner Yum! Brands Inc. (NYSE: YUM).

This collapse in valuation comes as Chipotle’s stock slid back to levels last seen in 2023, a stark contrast to the new highs across the broader equity market. The compression suggests much of the negative news around consumer demand, cost pressures and weakening industry sentiment may already be reflected in the price. If downside is already priced in, the risk-reward at these levels starts to look attractive.

Bears Are Losing Momentum

It’s not just valuation that supports the bull case; the technicals are beginning to shift as well. While September saw the stock fall to fresh lows, bears have tried and failed multiple times to keep Chipotle below the $40 mark. Although the downtrend is still visible, selling pressure has largely eased and the stock is showing encouraging signs of consolidation.

The longer this consolidation continues, the greater the likelihood bulls will regain control. Momentum indicators are stabilizing in a bullish way: Chipotle’s RSI, which was deep in oversold territory during September, has started to trend upward, and the stock’s MACD recently produced a bullish crossover. Taken together, these signals suggest a low may have been formed after months of non-stop weakness.

Analysts Line Up On the Bull Side

Wall Street is taking notice of this setup. Just yesterday, Bernstein reiterated its Outperform ratingon Chipotle, joining a growing chorus of analysts who see substantial upside from here.

Their update echoed recent notes from TD Cowen, Stifel, Rothschild and Piper Sandler, all of which issued bullish takes over the past month.

There’s broad consensus that Chipotle’s growth model, its strength with younger demographics and an ongoing digital push are meaningful tailwinds that should help the stock trend higher in the months ahead.

Recent analyst activity suggests near-term dips may be viewed more as buying opportunities than red flags.

Can Chipotle’s Cheap Valuation Spark a Turnaround?

Chipotle’s leadership also announced a $500 million additional share repurchase program last month, one of the clearest signals a company can send that it believes its shares are undervalued.

Refreshed analyst price targets go as high as $60, implying roughly 50% upside from where the stock recently traded. That potential return, combined with a valuation not seen in nearly a decade, helps explain why many analysts call this a rare buying opportunity.

To be sure, risks remain. Consumer spending trends are uncertain, competition across the restaurant industry is intensifying, and cost inflation could keep pressure on margins. Still, when a high-quality growth company trades at these low multiples while analysts see significant upside, it’s difficult to ignore.