Yum!(US:YUM) Forbesยท2024-12-12 15:00Core Viewpoint - Chipotle Mexican Grill (CMG) is considered a better investment option compared to Yum! Brands (YUM) due to its superior revenue growth, profitability, and financial position, despite CMG trading at a higher sales multiple [1]. Group 1: Stock Performance - CMG stock has shown more volatility in annual returns over the last three years, with returns of 26% in 2021, -21% in 2022, and 65% in 2023, compared to YUM's more stable returns of 30% in 2021, -6% in 2022, and 4% in 2023 [2]. Group 2: Revenue Growth - Chipotle's sales have increased at an average annual rate of 14.4%, rising from approximately $7.6 billion in 2021 to $9.9 billion in 2023, while Yum! Brands' sales grew at an average rate of 3.7%, from $6.6 billion to $7.1 billion in the same period [4]. - In the first three quarters of 2024, CMG's revenues grew by 15% year-over-year to $8.5 billion, while YUM's revenues increased by only 3% year-over-year to $5.2 billion [4]. Group 3: Profitability - Chipotle's operating margin improved from 10.7% in 2021 to 15.8% in 2023, and reached 17.7% for the first nine months of FY 2024, while Yum! Brands' operating margin increased slightly from 32.5% to 32.8% during the same period [7]. Group 4: Financial Position - Yum! Brands has a better debt position with a debt-to-equity ratio of 28.7%, compared to Chipotle's 120% [8]. - However, Chipotle has a higher cash position, with 15% of its assets in cash compared to Yum! Brands' 9% [9]. Group 5: Future Expectations - Chipotle is expected to achieve a return of 33% over the next three years, while Yum! Brands is projected to have a 12% return [10]. - Chipotle's valuation is estimated at $61 per share based on a 54x P/E multiple and expected earnings of $1.12 per share for the full year 2024 [10].