Hi Chris,
I 'm guessing CMG is one of your core holdings.
I have only done some cursory analysis on CMG, so may be my questions and concerns are completely misplaced.
o It looks like their revenue growth has been trending down for the past 3- to 4 years. The YoY revenue growth numbers (off the top of my head) have been 23%, 20%, and most recently 17%.
o I see the earnings growth has been good but earnings can forever be ahead of revenue growth. This looks like a problem to me, especially when one considers the 50x multiple for CMG.
o They have 1600+ stores in the US. I know they are looking to expand via other concepts, but 1600+ stores looks like a fairly “mature” concept. There’s the international expansion opportunity, i.e., they can try to be the next Macca’s but there too it appears the initial forays into international markets (Europe) has been met with cold reception. In Australia, for example, we have Guzman y Gomez (https://www.guzmanygomez.com), which is doing pretty well, so I see that this concept has potential elsewhere but it pretty untested.
So, the question is – Why do you think investors should be happy to pay a premium multiple for CMG at this stage of its evolution?
Anirban