If you are looking for the Chipolte (NYSE:CMG) comeback, I’m sorry to say, it already happened. Chipotle stock rallied from a $250 low in February 2018 to a $530 high by August 2018.

It all started when the company hired a new CEO, Brian Niccol, the man who engineered a successful comeback at Taco Bell. Comparable sales and margins gradually improved over the next several months due to delivery expansion and menu innovations. The market celebrated those improvements. Chipotle stock more than doubled in six months, but that comeback is over.

Chipotle stock has fallen nearly 10% off its recent highs, its biggest correction since this uptrend started in February. A recent mini-rally at the beginning of September has failed to hold. And now it’s threatening to break below its 50-day moving average.

In other words, the technical uptrend in Chipotle stock is breaking down. That is because around $500, the valuation on Chipotle makes no sense. Moreover, risks that are weakening this company’s fundamentals and depressing the long-term profit outlook are mounting .

Overall, Chipotle stock should be avoided here. The technicals are weakening. The fundamentals are weakening. And the valuation is overstretched. That is a recipe for Chipotle to head lower.

Risks Are Mounting

Chipotle will never regain peak sales volume because it will never regain peak consumer popularity.

This has been a risk for this company for a long time, and remains a the biggest risk today. Chipotle made a killing earlier this decade by selling healthy, fast-casual food at a reasonable price point. But, recurring food safety issues have caused the healthy, fast-casual trend to pass by Chipotle.

Poke and acai bowls are the new craze. Chipotle burritos have become a thing of the past. Meanwhile, low-quality but cheap fast-casual peers like McDonald’s (NYSE:MCD) have upped their food quality recently and are starting to attract health-oriented consumers with a low price bend.

Overall, no matter how many ads Chipotle runs or how many delivery partnerships they land or how many new products they introduce to the menu, this company will have a tough time regaining peak popularity.

The competitive environment in the healthy, fast-casual space is just so much more competitive now, and consumers are voting with their wallets by not going back to Chipotle (traffic growth is still negative).

An inability to regain peak popularity means an inability to regain peak unit sales volume. That is a big deal because an inability to regain peak unit sales volume means an inability to regain peak margins. Without peak margins, the valuation on CMG stock at or near $500 doesn’t make much sense.

Moreover, recent developments have only weakened the Chipotle narrative. Wage growth is back, and Darden (NYSE:DRI) management talked about the wage growth headwind on a recent conference call. Rising wages are a big problem for Chipotle, and a big part of this company’s growth comes from expanding the real estate footprint.

That means more stores, and a bigger payroll. If wages rise, that is a big additional cost for Chipotle, and yet another reason why margins won’t get back to peak levels.

Also, Amazon (NASDAQ:AMZN) is making a huge food-oriented convenience store push in urban areas over the next three years. That is a threat to Chipotle, a fast-casual chain that is already having trouble driving traffic growth.

Presumably, Amazon’s encroachment into this space will hurt the weak links the most. At this time, Chipotle looks like one of those weak links.

Valuation Isn’t Supported

Long-term, Chipotle has a promising unit growth narrative. But, considering the health trend has passed up Chipotle, food safety issues linger, and Amazon is a new threat, this company will have a tough time driving anything better than low single-digit comparable sales growth for the foreseeable future.

That means Chipotle is likely a 10% or lower revenue growth company going forward. Margins can head higher. But, rising wages and falling popularity imply that margins won’t ever get back to 2015 highs.

Thus, this is a company with mild revenue growth and margin expansion potential. Putting those two together, Chipotle stock just doesn’t have enough earnings power to justify its current price tag. At best, I see this company netting $29 in earnings-per-share in five years.

At that point in time, CMG stock should trade at a similar valuation to McDonald’s because margins will be tapped out. MCD stock normally trades at 19.5X forward earnings. A 19.5X forward multiple on $29 implies a four-year forward price target of $566. Discounted back by 10%-per-year, that equates to a year-end price target of $425.

Bottom Line on CMG Stock

Chipotle stock is overvalued, and operational headwinds opposing this company are only growing in number and magnitude. I doubt this stock sees $500 again before the end of the year, and actually think sub-$450 prices are far more likely.

As of this writing, Luke Lango was long AMZN and MCD.