Buffalo Wild Wings (BWLD) vs Chipotle (CMG)

Just writing about Buffalo Wild Wings (BWLD) and Chipotle (CMG) makes me hungry! 

Because of the growth in stores, BWLD and CMG are spending the majority of their CapEx on growth.  In order to properly value the companies, I need to strip out the growth CapEx from the maintenance.    Fortunately, BWLD provides additional details on maintenance vs growth CapEx in their 10K which can be found here (page 31).


"In 2011, we expect capital expenditures for approximately 50 new or relocated company-owned restaurants to cost approximately $1.8 million per location, and expenditures of approximately $20.0 million for the upgrades and remodels of existing restaurants. We also expect to spend approximately $4.0 million for technology improvements at our company-owned restaurants and at our home office."

In the rest of the filings, no information was given regarding any relocations completed.  To be conservative, I used 8 relocations with a cost of 1.8 million (16% or 2 per quarter) as part of maintenance capital requirements in addition to the $24 million (or $18 YTD).

CMG also discloses their growth vs maintenance CapEx in their 10k (page 34)

"Our total capital expenditures for 2010 were $113.2 million, and we expect to incur capital expenditures of about $131 million in 2011, of which $111 million relates to our construction of new restaurants and the remainder primarily relates to restaurant reinvestments."

Based on CMG disclosures above, maintenance capital is expected to be approx 15% (20/131) or 14.2 million YTD.

Calculating Free Cash Flow

FCF = NI + Dep + Amortization - Maintenance Capital

BWLD
43.7 = 36.8 + 35.1 + 0.6 - 28.8

CMG

199.0 = 157.5 + 55.7 + 0 - 14.2
As sales are consistent at both restaurants, FCF can easily be annualized at 58 million and 265 million.

Valuation 

BWLD, with a current enterprise value of 1.073B, a FCF multiple of 18.4 is projected.
CMG, with a current enterprise value of 10.051 billion, a FCF multiple of 37.93 is projected. 

While I am a big fan of the food at both, I can only be a fan of BWLD stock at its current valuation.  For those who trade long - short, I believe that a BWLD/CMG pair trade is appealing on a longer term horizon.  In the short term, I do not see a catalyst for CMG to head lower.