Financial Comparison: Chipotle Mexican Grill (NYSE:CMG) and Shake Shack (NYSE:SHAK)

Shake Shack (NYSE:SHAK) and Chipotle Mexican Grill (NYSE:CMG) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Shake Shack and Chipotle Mexican Grill, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shake Shack	1	14	10	1	2.42
Chipotle Mexican Grill	1	11	23	0	2.63

Shake Shack currently has a consensus target price of $116.64, indicating a potential upside of 31.99%. Chipotle Mexican Grill has a consensus target price of $47.37, indicating a potential upside of 43.69%. Given Chipotle Mexican Grill’s stronger consensus rating and higher possible upside, analysts plainly believe Chipotle Mexican Grill is more favorable than Shake Shack.

Valuation and Earnings

This table compares Shake Shack and Chipotle Mexican Grill”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shake Shack	$1.45 billion	2.61	$45.72 million	$1.09	81.07
Chipotle Mexican Grill	$11.93 billion	3.60	$1.54 billion	$1.14	28.92

Chipotle Mexican Grill has higher revenue and earnings than Shake Shack. Chipotle Mexican Grill is trading at a lower price-to-earnings ratio than Shake Shack, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Shake Shack has a beta of 1.73, suggesting that its stock price is 73% more volatile than the S&P 500. Comparatively, Chipotle Mexican Grill has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Profitability

This table compares Shake Shack and Chipotle Mexican Grill’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shake Shack	3.16%	11.08%	3.23%
Chipotle Mexican Grill	12.88%	47.99%	17.15%

Insider and Institutional Ownership

86.1% of Shake Shack shares are owned by institutional investors. Comparatively, 91.3% of Chipotle Mexican Grill shares are owned by institutional investors. 8.5% of Shake Shack shares are owned by insiders. Comparatively, 0.8% of Chipotle Mexican Grill shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Chipotle Mexican Grill beats Shake Shack on 11 of the 15 factors compared between the two stocks.

About Shake Shack

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.

About Chipotle Mexican Grill

Chipotle Mexican Grill, Inc., together with its subsidiaries, owns and operates Chipotle Mexican Grill restaurants. It sells food and beverages through offering burritos, burrito bowls, quesadillas, tacos, and salads. The company also provides delivery and related services its app and website. It has operations in the United States, Canada, France, Germany, and the United Kingdom. Chipotle Mexican Grill, Inc. was founded in 1993 and is headquartered in Newport Beach, California.