Dividend Discount Model (DDM)
In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.
Intrinsic Stock Value (Valuation Summary)
Chipotle Mexican Grill Inc., dividends per share (DPS) forecast
US$
| Year | Value | DPSt or Terminal value (TVt) | Calculation | Present value at 16.35% |
|---|---|---|---|---|
| 0 | DPS01 | 0.00 | ||
| 1 | DPS1 | — | = 0.00 × (1 + 0.00%) | — |
| 2 | DPS2 | — | = — × (1 + 0.00%) | — |
| 3 | DPS3 | — | = — × (1 + 0.00%) | — |
| 4 | DPS4 | — | = — × (1 + 0.00%) | — |
| 5 | DPS5 | — | = — × (1 + 0.00%) | — |
| 5 | Terminal value (TV5) | — | = — × (1 + 0.00%) ÷ (16.35% – 0.00%) | — |
| Intrinsic value of Chipotle Mexican Grill Inc. common stock (per share) | $— | |||
| Current share price | $58.73 | |||
Based on: 10-K (reporting date: 2023-12-31).
1 DPS0 = Sum of the last year dividends per share of Chipotle Mexican Grill Inc. common stock. See details »
Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.
Required Rate of Return (r)
| Assumptions | ||
| Rate of return on LT Treasury Composite1 | RF | 4.65% |
| Expected rate of return on market portfolio2 | E(RM) | 13.79% |
| Systematic risk of Chipotle Mexican Grill Inc. common stock | βCMG | 1.28 |
| Required rate of return on Chipotle Mexican Grill Inc. common stock3 | rCMG | 16.35% |
1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).
3 rCMG = RF + βCMG [E(RM) – RF]
= 4.65% + 1.28 [13.79% – 4.65%]
= 16.35%
Dividend Growth Rate (g)
Company does not pay dividends.