Critical Review: Chipotle Mexican Grill (NYSE:CMG) and Starbucks (NASDAQ:SBUX)

Chipotle Mexican Grill (NYSE:CMG) and Starbucks (NASDAQ:SBUX) are both large-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Analyst Ratings

This is a summary of recent recommendations and price targets for Chipotle Mexican Grill and Starbucks, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chipotle Mexican Grill	0	9	27	0	2.75
Starbucks	4	12	24	0	2.50

Chipotle Mexican Grill presently has a consensus target price of $43.56, suggesting a potential upside of 55.89%. Starbucks has a consensus target price of $110.14, suggesting a potential upside of 6.89%. Given Chipotle Mexican Grill’s stronger consensus rating and higher probable upside, research analysts plainly believe Chipotle Mexican Grill is more favorable than Starbucks.

Institutional and Insider Ownership

91.3% of Chipotle Mexican Grill shares are held by institutional investors. Comparatively, 72.3% of Starbucks shares are held by institutional investors. 0.4% of Chipotle Mexican Grill shares are held by company insiders. Comparatively, 0.0% of Starbucks shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk and Volatility

Chipotle Mexican Grill has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500. Comparatively, Starbucks has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Chipotle Mexican Grill	N/A	N/A	N/A
Starbucks	N/A	N/A	N/A

Valuation and Earnings

This table compares Chipotle Mexican Grill and Starbucks”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chipotle Mexican Grill	$12.42 billion	2.85	$1.38 billion	$1.09	25.63
Starbucks	$38.34 billion	3.06	$1.98 billion	$1.74	59.22

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

Summary

Starbucks beats Chipotle Mexican Grill on 6 of the 11 factors compared between the two stocks.

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.

About Starbucks

Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of coffee worldwide. The company operates through three segments: North America, International, and Channel Development. Its stores offer coffee and tea beverages, roasted whole beans and ground coffees, single serve products, and ready-to-drink beverages; and various food products, such as pastries, breakfast sandwiches, and lunch items. The company also licenses its trademarks through licensed stores, and grocery and foodservice accounts. The company offers its products under the Starbucks Coffee, Teavana, Seattle’s Best Coffee, Ethos, Starbucks Reserve, and Princi brands. Starbucks Corporation was founded in 1971 and is based in Seattle, Washington.