Chipotle Mexican Grill sales performance during the second quarter this year was astounding, which in effect caused the restaurant's stock value to increase.
The fast-casual burrito joint markets for about 59 times trailing earnings, and 39 times predicted 2015 earnings.
Chipotle's long term revenue growth and margin expansion prospects caused investors to buy the restaurant's stock.
David Einhorn, Taco Bell fund manager belittled Chipotle because at that time, Taco Bell was about tot release new high-class product offerings.
Chipotle begged to differ as the May to August sales of the fast-casual food chain this year advanced to $1.05 billion, 50 percent more than the last quarter reported before Einhorn made his wager.
Investors agree that Chipotle will not give up easily. However, they claim that the restaurant stock is too costly.
Jeff Gundlach, an investor stated on CNBC last year that he thinks that Chipotle's stock is overvalued than it was previously. He openly recommended shorting Chipotle if the stocks rise to $380 value.
During that time, Chipotle was reportedly valued at $9.23, and was trading for 41 times trailing earnings, and reported a 1 percent restaurant sales growth in the first quarter this year.
More than a year after Gundlach's posing pessimism over the restaurant, Chipotle's stock is still getting "richer and richer," trading 59 times earnings.
The restaurant is expected to continue its accelerated growth, and by the end of 2015, it is reported to rise above $700 stock value to return to its May 2013 P/E ratio of 41.
The method reportedly to determine if Gundlach's statement is valid is to assess Chipotle's long-term potential.
The restaurant is proving its place in the market, with 1,681 stores and additional 200 every year.
However, Chipotle needs to up its game by adding more restaurants in order to satisfy demand.Overall, Chipotle stocks promises to remain high this quarter, and may very well reach beyond $700 value.
