Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Chipotle Mexican Grill Inc. pages available for free this week:
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2005
- Aggregate Accruals
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Economic Profit
Chipotle Mexican Grill Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- There is a consistent upward trend in NOPAT over the observed periods. From 2020 to 2024, NOPAT increased significantly from approximately $614 million to about $1.71 billion, indicating improved operational profitability and effective cost management.
- Cost of Capital
- The cost of capital remained relatively stable throughout the periods, fluctuating slightly around 16.6% to 16.92%. This stability suggests consistent market or company-specific risk levels affecting the capital costs.
- Invested Capital
- Invested capital shows an increasing trend, rising from nearly $4.94 billion in 2020 to approximately $6.83 billion in 2024. Despite a minor dip in 2022, the overall increase suggests ongoing investment in assets or growth initiatives over time.
- Economic Profit
- Economic profit displayed a notable improvement trajectory, shifting from negative values in 2020 and 2021 to positive figures beginning in 2022. By 2024, economic profit reached over $552 million, reflecting enhanced value creation beyond the cost of capital and effective use of invested capital.
Net Operating Profit after Taxes (NOPAT)
Chipotle Mexican Grill Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in unearned revenue.
4 Addition of increase (decrease) in restructuring liability.
5 Addition of increase (decrease) in equity equivalents to net income.
6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income.
The financial data over the five-year period reveals a consistent upward trend in both net income and net operating profit after taxes (NOPAT).
- Net Income
- Net income has shown significant growth each year, starting at 355,766 thousand US dollars in 2020 and increasing steadily to 1,534,110 thousand US dollars by 2024. This represents a more than fourfold increase over the period, indicating strong profitability improvements and potentially effective cost management or revenue growth strategies.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT also displays a continuous rise from 613,981 thousand US dollars in 2020 to 1,706,003 thousand US dollars in 2024. The growing NOPAT suggests enhanced operational efficiency and profitability, reflecting the company's ability to generate higher returns from its core operations after accounting for tax expenses.
Overall, the data illustrates robust financial performance, with net income and NOPAT improving substantially year over year. The parallel growth in both metrics underlines consistent operational success coupled with effective tax management. This positive trajectory indicates favorable prospects if the trends continue.
Cash Operating Taxes
Chipotle Mexican Grill Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The data reveals a consistent upward trend in both provision (benefit) for income taxes and cash operating taxes over the analyzed periods from 2020 to 2024.
- Provision (benefit) for income taxes (US$ in thousands)
- Initially, there was a negative value of -61,985 in 2020, indicating a tax benefit. However, this shifted to a positive figure in 2021, reaching 159,779, and continued to increase each subsequent year, culminating in 476,120 by 2024.
- Cash operating taxes (US$ in thousands)
- Similarly, cash operating taxes moved from a negative amount of -130,767 in 2020 to a positive 213,319 in 2021, with continuous growth each year thereafter. The amount more than doubled from 452,292 in 2023 to 573,988 in 2024.
The transition from negative to positive tax provisions and cash payments in 2021 suggests a significant change in the tax position or profitability of the company starting that year. The steady increase in both metrics through 2024 may indicate increasing taxable income or changes in tax rates or policies applied to the company. Additionally, the gap between provision for income taxes and cash operating taxes is evident and appears to widen over time, which could point to differences in deferred tax accounting effects or timing differences in tax payments.
Invested Capital
Chipotle Mexican Grill Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of unearned revenue.
5 Addition of restructuring liability.
6 Addition of equity equivalents to shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in Progress.
9 Subtraction of debt investments.
The financial data reveals consistent growth in key capital structure components over the observed five-year period.
- Total reported debt & leases
- There is a steady increase in total reported debt and lease obligations, rising from approximately $3.16 billion in 2020 to about $4.54 billion in 2024. The growth trend is continuous year-over-year, indicating an increasing reliance on leverage or lease obligations to finance operations or expansion initiatives.
- Shareholders’ equity
- Shareholders' equity shows a positive and notable growth trend, expanding from around $2.02 billion in 2020 to nearly $3.66 billion in 2024. The equity increases are more pronounced from 2022 onwards, suggesting retained earnings accumulation, equity infusion, or improved profitability driving the net asset value upwards.
- Invested capital
- Invested capital, representing the total amount of capital used for operations, also demonstrates an overall upward trend. It rises from about $4.94 billion in 2020 to approximately $6.83 billion in 2024, with a slight dip noted in 2022 relative to 2021. The rebound following 2022 highlights expansion or reinvestment efforts surpassing the previous year's level.
Overall, the data indicates a firm that is progressively increasing both its debt and equity bases to support growing invested capital. The increasing equity base alongside rising debt suggests balanced financing efforts, potentially enhancing financial flexibility and capacity for continued growth.
Cost of Capital
Chipotle Mexican Grill Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
Economic Spread Ratio
Chipotle Mexican Grill Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| DoorDash, Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- There is a notable improvement in economic profit over the observed five-year period. Initially, economic profit was negative, with a significant loss of 211,179 thousand US dollars in 2020. This loss decreased to 123,337 thousand US dollars in 2021, indicating a reduction in economic losses. From 2022 onward, the economic profit turned positive, reaching 132,008 thousand US dollars, and continued to increase substantially to 386,932 thousand in 2023 and 552,001 thousand in 2024. This trend demonstrates a considerable enhancement in the company's ability to generate returns above its cost of capital over time.
- Invested Capital
- The invested capital shows a general upward trend throughout the period, increasing from 4,937,915 thousand US dollars in 2020 to 6,827,838 thousand US dollars in 2024. There is a slight decline between 2021 and 2022, where invested capital decreased from 5,496,598 thousand to 5,396,406 thousand US dollars, but overall, the capital base has expanded, reflecting ongoing investment and growth in the company's asset base.
- Economic Spread Ratio
- The economic spread ratio, which reflects the difference between the return on invested capital and the cost of capital, shows significant improvement. It began at negative 4.28% in 2020, improved to negative 2.24% in 2021, and turned positive at 2.45% in 2022. This upward trajectory continued, increasing substantially to 6.44% in 2023 and further to 8.08% in 2024. The positive and increasing economic spread ratio indicates that the company has progressively enhanced its value creation capability, generating returns exceeding its cost of capital by a growing margin.
Economic Profit Margin
Chipotle Mexican Grill Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| DoorDash, Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenue Trend Analysis
- There is a consistent upward trend in adjusted revenue over the observed five-year period. The revenue increased from approximately 6.0 billion USD in 2020 to about 11.3 billion USD in 2024, showing steady year-on-year growth. This indicates an expanding business scale or improved sales performance throughout these years.
- Economic Profit Trend
- The economic profit displays a significant shift from negative to positive values. In 2020 and 2021, the company experienced economic losses, with figures of about -211 million USD and -123 million USD respectively. Starting in 2022, economic profit turned positive, reaching around 132 million USD and continuing to grow markedly to over 552 million USD by 2024. This demonstrates an improving ability to generate value above the cost of capital.
- Economic Profit Margin Analysis
- The economic profit margin reflects the efficiency in generating economic profit relative to revenue. Initially negative in 2020 and 2021, it improved to positive territory in 2022. The margin rose steadily thereafter, from 1.52% in 2022 to 4.87% in 2024, indicating enhanced profitability and effective cost management relative to revenue growth.
- Overall Financial Performance
- The combined analysis suggests the company has successfully transitioned from a period of economic underperformance to one of strong profitability and value creation. The simultaneous increase in revenue and improvement in economic profit and margin signifies a robust operational and financial improvement over the reviewed timeframe.