Do shareholders know something that I don't know when it comes to CMG? Is this a stock that is really worth 34 times its upcoming fiscal year's earnings (ending Dec. 31, 2013)? I don't think so!
Who in their right mind would pay that for a fast-food restaurant when Apple (AAPL) is selling for a little over 11 times forward earnings (fiscal year ending September 24, 2013)?
Yes I've heard the theory that same-store-sales growth is what justifies the CMG share price and nosebleed high P/E ratios. I'm not buying that reasoning.Like other overpriced, unreasonably highfliers -- remember First Solar (FSLR), which in the past 52-weeks traded at $127? -- it wouldn't surprise me if one of these days CMG comes down to earth and sells closer to $200 a share. What might trigger such a fall? How about a negative surprise like lowering its earnings guidance or missing its next quarterly earnings projections? I'm not saying it will happen, but caveat emptor! At the time of the publication, the author was long GG. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV