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

Key Points

• Chipotle is trading at its lowest valuation in nearly a decade, following a brutal multi-month selloff. 
• However, there are signs that a bottom may be forming as bearish momentum fades.
• Strong analyst support, big upside targets, and a share repurchase program help strengthen the bull case.

Shares of fast-food giant Chipotle Mexican Grill Inc. NYSE: CMG have not had the kind of 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 has accelerated since late July, with the stock down 30% in just two months and back trading at 2023 levels. For a company that was once among the most reliable growth names in the restaurant space, the reversal has been jarring.

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

For nearly a decade, the stock has commanded far higher valuations, often justified by strong expansion and margin growth. Today, investors are looking at a name that has historically been cheap, while also catching the attention of analysts who are calling it a red-hot buy opportunity. Let’s jump in and take a closer look. 

Chipotle’s Valuation Hits Decade-Low Levels

For years, Chipotle has traded at a premium to the broader market and to its restaurant peers, supported by solid store expansion trends and enviable pricing power. That premium has now all but collapsed and is only slightly higher than the PE ratio of KFC, Taco Bell, and Pizza Hut owner Yum! Brands Inc. NYSE: YUM, which sits at 30. 

This drop in its P/E has come as Chipotle’s stock has slid back to levels last seen in 2023, a stark contrast to the new highs being set across the broader equity market. The compression also suggests that much of the negative news surrounding consumer demand, cost pressures, and weakening industry sentiment may already be reflected in the price. If that’s the case, and the downside is indeed already priced in, the risk-reward at these levels starts to look seriously attractive.

Bears Are Losing Momentum

It’s not just valuation that makes the bull case compelling; the technicals are beginning to shift, too. While September saw the stock fall to fresh lows, the bears have tried and failed multiple times to keep the stock below the $40 mark. While the downtrend remains visible, the selling pressure has largely dissipated, and the stock is exhibiting promising signs of consolidation.

The longer this continues, the greater the likelihood that the bulls will be able to take complete control and own the narrative. Momentum indicators are also stabilizing in a bullish manner. Chipotle’s RSI, which had been deep in oversold territory through September, has started to trend upwards, while the stock’s MACD recently had a bullish crossover. These signals alone suggest that after months of non-stoop weakness, Chipotle is giving strong signals that a low has been formed.

Analysts Line Up On the Bull Side

Unsurprisingly, perhaps, Wall Street is also taking notice of this setup.

Just yesterday, the team over at Bernstein reiterated its Outperform rating on Chipotle, joining a growing chorus of analysts who see substantial upside from here.

Their update echoed that of TD Cowen, Stifel, Rothschild, and Piper Sandler, who all issued bullish notes over the past month. 

There’s a strong consensus that Chipotle’s growth model, its strength among younger demographics, and an ongoing digital push all form impressive tailwinds that should be more than enough to get the stock trending upwards in the weeks ahead.

Recent analyst actions suggest that any near-term dips could be viewed more as buying opportunities than red flags.

Can Chipotle’s Cheap Valuation Spark a Turnaround?

There’s also the fact that Chipotle’s leadership announced a $500 million additional share repurchase program last month, which is one of the strongest signals a company can give to the market that it believes its shares are undervalued. 

The refreshed price targets from analysts range as high as $60, implying a 50% potential upside from where the stock closed on Thursday. That kind of potential return, combined with a valuation that has not been this low in nearly a decade, explains why so many analysts are calling this a rare buying opportunity. 

To be sure, there are still risks. Consumer spending trends remain uncertain, competition across the restaurant industry is intensifying, and cost inflation could continue to put margins under pressure. However, when a high-quality growth company is trading at this low valuation, while analysts are calling for a 50% upside, it’s hard to ignore.